Key Takeaways
- Wendy’s shares jumped 15% after Nelson Peltz’s Trian Fund Management offered $7.35 a share in cash to take the burger chain private.
- Trian’s offer is almost exactly Wall Street’s average price target, which gives shareholders reason to push for more, though a non-binding proposal guarantees nothing.
- Analysts expect Wendy’s normalized earnings per share to fall from $0.88 in fiscal 2025 to $0.48 in fiscal 2026, and a big franchisee in Chapter 11 could close up to 60 more restaurants.
- Watch how Wendy’s board responds, and what management says with third-quarter results on Nov. 5.
Wendy’s (WEN) shares are up 15% today, at about $7.06, after Nelson Peltz’s Trian Fund Management offered to take the struggling burger chain private for $7.35 a share in cash, or about $1.4 billion.
The Wall Street Journal reported the offer before the open, and Trian made it official in a letter to Wendy’s board filed with the SEC today. It isn’t a total surprise: Reuters reported in August that Trian was assembling a group to bid.
Peltz Knows Exactly What He’s Buying
Trian’s funds already own about 16.3% of Wendy’s. Its group includes Flynn Group, one of Wendy’s biggest US franchisees, plus BlueFive Capital and Sixth Street Partners. The price is about a 20% premium to Tuesday’s close, and the proposal is non-binding.
Trian is pitching shareholders “certain, premium value” in place of the risks of a long, multi-year turnaround.
That turnaround won’t be easy. Meritage Hospitality Group, a franchisee that ran 314 Wendy’s restaurants when it filed for Chapter 11 on Sept. 17, could close up to 60 of them by mid-November. Wendy’s said on its second-quarter call that 289 US restaurants had closed in the first half of the year.
Analysts expect normalized EPS to fall from $0.88 in fiscal 2025 to $0.48 in fiscal 2026, with no improvement in 2027:
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Wall Street Had Already Given Up
The Street’s average price target slid from $23.60 three years ago to $7.32 as of Monday, the day UBS cut its target to $6.50 and BofA cut its to $7:
So Trian is offering almost exactly what Wall Street thought Wendy’s was worth.
It’s also buying cheap. Wendy’s traded at 13.4x forward earnings at Tuesday’s close, well below its five-year average of 18x:
Even at $7.35, that’s only about 16x.
Why $7.35 Looks Like a Starting Bid for Wendy’s
Peltz is offering the Street’s own target at a below-average multiple, which gives the board room to ask for a bit more. But with earnings expected to nearly halve, it can’t hold out for long.
The offer isn’t binding, and Trian has walked away before: it explored a deal in 2022 and dropped it in January 2023. Shares are still about 4% below $7.35, so the market sees some chance of a repeat.
The board’s response comes first, then third-quarter results on Nov. 5, management’s first chance to make the case for staying public.
So what is Wendy’s stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
