American billionaire Nelson Peltz faces Wendy's rejection as $1.4 billion takeover bid hits wall

American billionaire Nelson Peltz has suffered a setback in his attempt to take Wendy's private after the fast-food chain rejected a $1.4 billion acquisition proposal from his investor group and adopted a shareholder protection plan to deter an unsolicited takeover.

Wendy's independent directors unanimously rejected the $7.35-per-share cash offer, arguing that it substantially undervalued the company and failed to reflect the potential of its turnaround strategy. The proposal came from a group led by Peltz's Trian Fund Management, alongside Flynn Group, BlueFive Capital and Sixth Street Partners.

The investor group already owns approximately 16.3% of Wendy's and sought to acquire the remaining shares. The proposed price represented a roughly 20% premium to the company's closing share price before the offer became public.

As Billionaires.Africa previously reported in its coverage of Peltz's $1.4 billion offer for Wendy's, the billionaire and his partners wanted to take the restaurant chain private and give it greater flexibility to address its operating challenges. The board's rejection marks a new obstacle in that effort.

Wendy's also adopted a shareholder rights plan, commonly known as a poison pill, designed to prevent an investor from increasing control without board approval. The arrangement sets a 15% ownership threshold. Crossing it without approval could allow other shareholders to purchase additional shares at a discount, diluting the acquiring investor's stake.

The plan will remain in effect for one year unless the board terminates it earlier. It is intended to give directors time to evaluate proposals and protect shareholders from an unsolicited acquisition.

The rejection comes as Wendy's struggles to revive its business. Its U.S. same-store sales declined 5.7% in the third quarter, reflecting weaker customer traffic and intensifying competition in the fast-food market. The company has also withdrawn its annual financial forecast and reduced its dividend.

Chief Executive Bob Wright is leading a recovery strategy called Dave's Way, focused on improving food quality, strengthening marketing and increasing restaurant profitability. Wendy's has also made breakfast optional for franchisees to help restaurants concentrate on more profitable meal periods.

Despite the pressure, the company reported adjusted earnings per share of 13 cents, beating analysts' expectations. Management also said customer traffic improved sequentially during the quarter.

For Peltz, the rejection leaves his investor group to consider its next move, whether through an improved offer, engagement with shareholders or a possible board challenge. His existing stake and longstanding relationship with Wendy's give him significant exposure to the company's future, but the board has made clear that it will not accept the proposed terms.