Shares of Wendy’s (WEN) are down 14% on reports that a deal to take the restaurant chain private has collapsed.
Multiple media reports say that investor Nelson Peltz’s Trian Fund Management has walked away from plans to buy the struggling hamburger chain and take it private.
Trian, which already owns 16% of Wendy’s, had been assembling a consortium of private equity firms to acquire Wendy’s and delist its stock from the Nasdaq (NDAQ) exchange.
Wendy’s stock had been trading at a nine-month high on expectations that a takeover deal was imminent. But now, the shares are plunging as a deal looks unlikely.
Wendy’s business has struggled since the Covid-19 pandemic. Its same-restaurant sales fell 7% in this year’s second quarter, while international same-restaurant sales declined 2.3%.
Revenue rose 1.7% to $570.6 million U.S. in the latest quarter, but the company’s earnings declined to $0.18 U.S. from $0.29 U.S. a year earlier.
Wendy’s management team withdrew its full-year outlook and slashed the company’s dividend to conserve cash.
Wendy’s got a new CEO in May of this year when Bob Wright took the helm of the company.
Wright has said that Wendy’s has struggled with weak traffic, inconsistent operations, and too much discounting.
The new CEO is implementing a major turnaround strategy that’s focused on food quality and marketing, as well as restaurant operations and digital engagement.
Prior to today (Aug. 27), WEN stock had declined 61% over the past five years to trade at $9.04 U.S. per share.
