Wendy’s has rejected a $1.4 billion takeover proposal from a group led by billionaire investor Nelson Peltz, arguing that the offer significantly undervalues the struggling burger chain and its long-term growth prospects. The US fast-food company has also adopted a one-year shareholder defence plan, commonly known as a ‘poison pill’, to make it harder for the investor group to gain greater control without board approval. The decision comes as Wendy’s battles declining sales, rising operating costs and intensifying competition, while shutting hundreds of restaurants across the country.
The group offered $7.35 per share in cash to acquire the shares of Wendy’s that it does not already own. The offer values the proposed acquisition at approximately $1.4 billion. Alongside rejecting the offer, Wendy’s announced that its board had adopted a limited-duration shareholder rights plan on November 4. Under the plan, the rights become exercisable if an individual or group acquires 15% or more of Wendy’s outstanding shares without board approval. It also applies if an existing shareholder who already owns at least 15% purchases additional shares without approval. The plan will remain effective for one year and is scheduled to expire on November 3, 2027, although the board can consider ending it earlier. Wendy’s closed 240 restaurants in 2024 and announced earlier this year that it planned to shut as many as 358 additional outlets in 2026 as part of efforts to concentrate on more profitable locations. The billionaire investor previously served as chairman of the company’s board for 17 years, stepping down in 2024.
Because peltz’s investor group already owns approximately 16.3% of Wendy’s shares, the defence is particularly significant. Because peltz is not a newcomer to Wendy’s, the takeover proposal also carries significance.
Wendy’s said its independent committee of directors had unanimously rejected the unsolicited, non-binding proposal after reviewing it with independent financial and legal advisers. Wendy’s said the arrangement is intended to give its independent committee sufficient time to assess potential takeover proposals and protect the interests of all shareholders. The company also said the group had rejected an offer to enter into a customary standstill agreement, which would have restricted certain actions involving its shareholding and influence.
The proposal was submitted by an investor group comprising Peltz’s Trian Fund Management, restaurant operator Flynn Group and investment firms BlueFive Capital and Sixth Street Partners. The committee concluded that the offer substantially undervalued the company and failed to account for the potential benefits of its new turnaround strategy, called Dave’s Way. The arrangement is designed to discourage an investor or group from accumulating a controlling stake without offering an appropriate premium to other shareholders. If the threshold is triggered, other eligible shareholders will be allowed to purchase additional shares at a discounted price, potentially diluting the ownership stake of the investor that crossed the threshold. The acquiring group would not be entitled to exercise these rights. The takeover dispute comes at a difficult time for the burger chain, which has been struggling to retain customers in an increasingly competitive fast-food market. The company has also faced pressure from rising beef prices, ageing restaurant locations and consumers cutting back on spending. Competition from established rivals such as McDonald’s and Burger King, as well as growing burger chains including In-N-Out and Five Guys, has added to its challenges. His son, Bradley Peltz, continues to serve on Wendy’s board and is also a franchisee.