Wendy's rejects activist investor buyout and adopts poison pill plan after $1.4 billion bid

Directors reject the offer

Wendy’s said Thursday that it had rejected the $1.4 billion proposal, which it considered too low. A committee of independent directors voted unanimously against it on Wednesday, saying the offer substantially undervalued the company.

Trian Fund Management, led by Nelson Peltz, and its partners hold 16.3% of Wendy’s shares. The investor group made the buyout proposal to the company.

Rights plan sets ownership trigger

Wendy’s adopted a shareholder-rights plan, commonly called a poison pill, to deter a hostile takeover. It is scheduled to remain in effect for one year. Under the plan, shareholders other than a hostile bidder can buy discounted shares. The measure automatically takes effect if an individual or group owns at least 15% of Wendy’s shares.

Shares rise amid business pressures

Wendy’s shares jumped 14% last Wednesday after Peltz made the offer. They gained more than 2% Thursday as the company reported third-quarter results that exceeded expectations. Like other fast-food chains, Wendy’s has contended with inflation. Lower-income customers have visited less often as the company raised prices to address higher labor, food and packaging costs.