Wendy’s Rejects $1.4 Billion Takeover Bid and Adopts Poison Pill

Wendy’s board unanimously turned down the offer, led by Nelson Peltz’s Trian Partners, along with Flynn Group, BlueFive Capital and Sixth Street Partners. The group offered $7.35 per share. Wendy’s said an independent committee concluded the bid undervalued the chain’s prospects and long-term earnings potential. Board chairman Art Winkleblack also voiced confidence in CEO Bob Wright.

The company adopted a shareholder rights plan, commonly called a poison pill, that gives shareholders other than a hostile bidder the right to buy discounted shares. It is triggered if a person or group owns at least 15% of Wendy’s shares and is set to remain in effect for one year. The investor group already holds 16.3%.

Wendy’s shares jumped 14% after the offer became public the previous Wednesday and rose more than 2% on November 5, when the company posted better-than-expected third-quarter results. The stock had fallen nearly 14% over the preceding 12 months; it traded at $7.75 before markets opened on November 5.

The chain remains profitable but has faced slowing revenue growth and pressure from inflation. Rising labor, food and packaging costs have driven price increases, while lower-income customers have reduced visits. Wright has also pointed to problems with food quality, staffing, training, drive-through service and marketing. Wendy’s, founded in 1969, operates more than 7,000 locations worldwide.