Oct 28 (Reuters) – Nelson Peltz’s Trian Fund Management has offered to take Wendy’s private in a deal valuing the burger chain at about $1.4 billion, a regulatory filing showed on Wednesday, the latest sign of consolidation in the struggling US food industry.
Trian, a longtime Wendy’s shareholder that holds a 16.3% stake along with related parties, is leading a group that has offered $7.35 per share in cash for the fast-food chain.
Shares of Wendy’s jumped about 16% to $7.12 premarket. The offer represents a roughly 20% premium to Wendy’s closing price on Tuesday, when the company had a market value of about $1.2 billion.
Restaurant operator Flynn Group and investment firms BlueFive Capital and Sixth Street Partners are working with Trian on the bid, according to the filing. Flynn operates more than 340 Wendy’s restaurants and is one of the chain’s largest U.S. franchisees, as well as its master franchisee in Australia and New Zealand.
Trian said Wendy’s was at a “critical juncture”, citing pressure on US consumers, economic uncertainty, persistent commodity inflation and intensifying competition in the fast-food burger market.
“The business requires significant capital investment to de-lever and execute the strategic initiatives needed to turn system performance around,” it said in a letter to Wendy’s.
Wendy’s did not respond to a Reuters request for comment.
The news of Wednesday’s offer was first reported by the Wall Street Journal.
CIRCLING FOR YEARS
Peltz first expressed interest in a potential takeover bid for the burger chain in 2022, almost two decades after the billionaire hedge fund manager first invested in the company.
Earlier this year, Reuters and others reported that Trian and a consortium of investors were preparing a bid to take the fast-food chain private.
Reuters later reported that Trian had no immediate plans to make a take-private offer and had concerns about Wendy’s performance, including its share price and valuation multiples, as well as its strategic direction.
In February, Peltz said the stock was undervalued and that his investment firm had spoken with potential financing sources about deals, including an acquisition or other major transactions.
(Reporting by Anuja Bharat Mistry in Bengaluru; Editing by Devika Syamnath)
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