- Trian Partners is seeking to increase Wendy’s (NASDAQ:WEN) shareholder value via a potential deal
- The firm is the largest shareholder in the company
- Shares of WEN stock are up over 10% on the news
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Shares of Wendy’s stock are soaring higher today after Nelson Peltz’s Trian Partners disclosed that it is exploring a deal with the company. Trian is seeking to “enhance shareholder value” through a potential acquisition or merger. The hedge fund said it has already spoken with advisors as well as Wendy’s board.
As of the first quarter, Trian had $7.63 billion in assets under management (AUM). During the period, the fund also purchased 15.88 million shares of WEN stock, increasing its existing position by 62%. Other companies in the fund’s portfolio include Domino’s Pizza (NYSE:DPZ) and Kraft Heinz (NASDAQ:KHC).
Trian first invested in Wendy’s in 2005. However, the firm believes that, since the passing of founder Dave Thomas, the fast-food retailer has gone downhill. Excluding today’s gains, shares of the company were down about 32% year-to-date (YTD).
WEN Stock: Trian Partners Explores Potential Deal
Trian and its partners are Wendy’s largest shareholder, with a roughly 19% stake. The second and third largest shareholders are Vanguard Group and BlackRock (NYSE:BLK), respectively. In addition, Trian already holds three seats on Wendy’s board. The fund’s founding partner and CEO, Nelson Peltz, is the chairman of the board. Meanwhile, additional founding partner Peter May is non-executive vice chairman and Peltz’s son, Matthew Peltz, serves as a board member.
In a statement, Wendy’s said it would “carefully review” any forthcoming proposal from Trian. According to CNBC, the company has an internal goal of “maximizing value for all stockholders.”
Trian has a long history with Wendy’s. In 2008, Triarc Companies — a Trian affiliate and the parent company of Arby’s — merged with Wendy’s. Eventually, the firm sold Arby’s to a private-equity firm and Wendy’s started its remodeling program to revamp restaurants. In 2013, Wendy’s also started a refranchising program to “significantly reduce the percentage of company-owned stores by the end of 2016.”
According to CNBC, the fast-food company and its franchises own around 7,000 restaurants today. For Q1, Wendy’s reported net income of $37.4 million, down 10% year-over-year (YOY) from $41.4 million. That equates to an earnings per share (EPS) figure of 17 cents.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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