Wendy’s board of directors on Thursday unanimously rejected a $1.4 billion hostile takeover bid from a group of investment firms, saying the offer undervalues the restaurant chain and is not in the best interest of shareholders.
“The Independent Committee thoroughly evaluated this Proposal and unanimously concluded that it substantially undervalues Wendy’s standalone prospects and long-term earnings potential,” Art Winkleblack, chairman of the board, said in a statement, while also expressing confidence in CEO Bob Wright.
The takeover bid was led by asset management firm Trian Partners, founded by activist investor Nelson Peltz, along with Flynn Group LP, BlueFive Capital and Sixth Street Partners.
The groups are offering $7.35 per share for Wendy’s, whose stock traded at $7.75 before markets opened on Thursday. Although it remains profitable, Wendy’s has faced slowing revenue growth in recent years, and its stock price has slumped nearly 14% over the last 12 months.
In an August earnings call with Wall Street analysts, Wright said the restaurant chain must improve the quality of its food.
“Wendy’s has always been known for quality, fresh, never frozen beef, hamburgers made to order, bacon cooked in our restaurants and fresh produce prepared daily,” he said. “But over time, we’ve drifted away from some of the standards that made Wendy’s distinctive. While we’ve maintained core practices in some areas, we’ve led cost and efficiency drive decisions that weaken that differentiation.”
Wendy’s has also struggled with operational issues, including staffing, employee training, handling drive-thru orders and marketing, Wright said during the call.
Wendy’s confirmed it received the unsolicited offer last month and said it would create an independent board to review the proposal.
Wendy’s, founded in 1969, has more than 7,000 locations globally.
