Shares of Wendy’s Co. (WEN) rallied a solid 14.5% in Tuesday’s extended trading session and a further 12.2% at the time of writing after the company’s largest shareholder, Trian Fund Management LP, said it was looking for a potential deal to buy the remaining stakes in the company.
In a securities filing, the activist hedge fund said, “It intends to explore and evaluate the possibility of the Filing Persons’ participating, alone or with third parties, in a potential transaction with respect to the Company to enhance shareholder value.”
It said that the transaction could “include an acquisition or a business combination such as a merger, consolidation or a tender offer.”
Further, Trian has appointed financial, legal and/or other advisors for discussing the potential options.
The Co-Founder of Trian and Chairman of Wendy’s board, Nelson Peltz, controls about 19.4% of Wendy’s stock through his private equity fund, Trian, and other affiliates.
The announcement comes at a time when Wendy’s is struggling with rising costs due to inflationary pressure and supply-chain issues.
On May 11, 2022, Wendy’s reported its first-quarter results. Adjusted earnings dropped 15% year-over-year, due to higher commodity and labor costs, lower customer demand and investments made to expand operations into the United Kingdom.
Last week, Loop Capital Markets analyst Alton Stump maintained a Buy rating on Wendy’s with a price target of $26 (implying 59.8% upside potential from current levels).
Based on 11 Buys, 10 Holds and one Sell rating, the stock has a Moderate Buy consensus rating. Wendy’s average price forecast of $22.79 implies 40.1% upside potential from current levels.
TipRanks data shows that financial bloggers are 90% Bullish on WEN, compared to a sector average of 66%.
The market has welcomed the news of Wendy’s takeover with open arms. This is because the company struggles with rising costs and a contracting customer base.
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