Wendys stock soars on report struggling chain could go private

Wendy’s soared 16% Wednesday after a report that billionaire Nelson Peltz’s hedge fund Trian Fund Management could buy the flailing fast-food chain in a $1.4 billion deal.  The hedge fund is leading a group including restaurant operator Flynn Group and investment firms BlueFive Capital and Sixth Street Partners, which have offered $7.35 a share in cash to take over Wendy’s, the Wall Street Journal reported, citing anonymous sources. Its bid marks a roughly 20% premium over Wendy’s closing price on Tuesday of about $1.2 billion, and comes after years of Trian pushing for a sale of the struggling burger franchise. The company’s stock is down nearly 25% so far this year and more than 70% over the past five years as it has reported a slump in sales, net income and earnings per share as costs rise. In May, Wendy’s former chief operating officer Robert Wright – most recently CEO of sandwich chain Potbelly – took the helm as chief executive, becoming the chain’s fourth leader in the last three years. The broader restaurant industry has been struggling, especially fast-food chains, as lower-income consumers cut back on spending amid stubborn inflation and fears of higher interest rates. But rival Burger King has executed a turnaround – including a revamped Whopper burger and improved customer service – that propelled the chain to the second-largest US burger chain, pushing Wendy’s into third place. Trian Fund Management believes that Wendy’s is now at “a critical juncture,” people familiar with the matter told the Wall Street Journal. Leaders at the activist investment fund think the company needs significant capital investments, and that a complex turnaround strategy would be easier to execute as a private company. The hedge fund is a longtime shareholder in Wendy’s, currently holding a roughly 16% stake. Trian co-founder Peter May has sat on the fast-food chain’s board for 18 years.Bradley Peltz, one of Nelson Peltz’s sons, j...