Wendy’s Co. (NASDAQ: WEN) shares tumbled in premarket trading Thursday, falling more than 14% following reports that Trian Fund Management has decided not to proceed with a take-private bid at this time. The account of Trian’s change of course came from sources who spoke with Reuters.
According to those sources, Trian - led by Nelson Peltz - does not currently intend to make a formal buyout offer for the burger chain. The sources said the firm has reservations about several aspects of Wendy’s situation, specifically pointing to the company’s recent trading price, its valuation multiples and the current strategic direction being pursued by management.
The decision to shelve a potential bid marked a reversal from earlier reports this month that indicated Trian was preparing a proposal in collaboration with a group of investors. That group was reported to include BlueFive Capital and the Flynn Group, a Wendy’s franchisee. At the time, Trian was described as a long-standing shareholder in Wendy’s, holding about 16% of the company’s shares.
News of a potential bid earlier in August had lifted Wendy’s stock. On Aug. 12 the shares advanced 14.7% after initial reports of Trian’s interest, and the stock continued to gain momentum thereafter, rising to roughly $9 per share and driving the company’s market capitalization to around $1.72 billion.
The most recent developments produced heavy selling pressure: Wendy’s dropped 13.3% in post-market trading on Wednesday after the Reuters account, and losses extended into Thursday’s premarket session, where the decline exceeded 14%.
Reuters also reported that its sources indicated Trian is keeping an open mind about its future intentions, suggesting the firm has not ruled out other courses of action even as it has stepped back from an immediate take-private effort.
Contextual note: The reporting cited above is based on sources who spoke with Reuters and describes the current position and near-term intentions attributed to Trian regarding a possible transaction involving Wendy’s. The facts presented here are limited to the information contained in those reports.