Wendy's announced Thursday that it has rejected a $1.4 billion buyout offer from activist investor Nelson Peltz, stating that the bid "substantially undervalues" the company. In addition to rejecting the offer, the fast-food chain adopted a shareholder rights plan, commonly known as a "poison pill," to make hostile takeovers more difficult.
The plan automatically triggers if an individual or group acquires 15% or more of Wendy's shares, granting all other shareholders the right to buy discounted shares. This measure is intended to deter a hostile takeover.
Peltz's Trian Fund Management, along with other partners in the investor group, currently holds a 16.3% stake in Wendy's. The "poison pill" plan is set to remain in effect for one year.
The rejection comes as Wendy's, like other fast-food chains, has faced challenges with inflation. Rising labor, food, and packaging costs have led the company to increase prices, impacting customer visits, particularly among lower-income consumers.
Wendy's shares saw a notable surge of 14% last Wednesday following Peltz's initial offer. The stock experienced an additional rise of over 2% on Thursday amid the company's announcement of better-than-expected third-quarter performance.