Fast Food Chain Wendy’s Facing Possible Takeover

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The Wendy’s share price jumped following a statement by major shareholder Nelson Peltz, who is considering an overall takeover of the company. The papers of the U.S. burger chain rose by almost 10%.

The Wendy’s Company: Burger Chain With Tradition

The Wendy’s Company (WEN), together with its subsidiaries, operates as a fast food restaurant and is a real estate group. The company was formerly known as Wendy’s/Arby’s Group and changed its name to The Wendy’s Company in July 2011. It was originally founded in 1969 and is headquartered in Dublin, Ohio.

The company operates in three segments: Wendy’s U.S., Wendy’s International and Global Real Estate & Development. The company operates, develops and franchises a system of quick service restaurants specializing in hamburgers.

As of Jan. 2, 2022, the company operated approximately 403 company-owned restaurants, 5,535 franchised restaurants in the United States and 1,006 franchised restaurants internationally. The company also owns and leases real estate. It owns 485 and leases 1,235 properties that are leased or subleased to franchisees.

Major Shareholder With Takeover Ambitions

Now Trian Partners is reaching out to Wendy’s and sounding out an overall takeover of the burger chain. Behind Trian Partners is the famous billionaire investor Nelson Peltz. 

In total, the major investor has raised 41.6 million shares. This corresponds to a share of 19.4% of all outstanding shares. At the same time, Peltz announced that he is considering an entire takeover.

Long History Connects Peltz With Wendy’s Burger Chain

Peltz, a major investor, has a long history with the burger chain. For background, Peltz has been invested with Wendy’s for nearly two decades. In 2008, Peltz’s investment arm acquired Wendy’s for what was then $2.2 billion and merged the group with the Arby’s chain.

Wendy’s sold a majority stake in Arby’s to a private equity firm for $130 million in cash in 2011. In recent years, he has assisted the group with various initiatives to create shareholder value. Today, Peltz chairs the board of Wendy’s.

First Quarter Below Expectations

Shares of the company hit a two-year low last month after weaker-than-expected first-quarter sales. Wendy’s posted first-quarter sales of about $488.6 million, up 6.2% from the same period last year. However, the group missed expectations by $6.7 million.

At the same time, operating EBITDA slumped 11.6% to $106.9 million. The bottom line was a profit of 17 cents, down from 20 cents a year earlier. That was 2 cents below expectations.

Full-Year Growth Expected

Analysts expect 2022 revenue to be in the range of about $2.1 billion. But at the same time, the group warned that breakfast sales – a key revenue driver – would likely only rise to the lower end of previous forecasts as customers rein in spending. The bottom line is expected to be 82 cents to 86 cents.

Billionaire Nelson Peltz seems a little bothered by the headwinds. He plans to take advantage of the depressed share price to secure the company outright.

Dr. Gregor Bauer
Dr. Gregor Bauer
Dr. Gregor Bauer credits his trading success to combining fundamental aspects of a trade with expert technical analysis. A Certified Financial Technician from the International Federation of Technical Analysts (IFTA), he’s rated as one of Germany’s top 300 economic experts.
Dr. Gregor Bauer
Dr. Gregor Bauer
Dr. Gregor Bauer credits his trading success to combining fundamental aspects of a trade with expert technical analysis. A Certified Financial Technician from the International Federation of Technical Analysts (IFTA), he’s rated as one of Germany’s top 300 economic experts.

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