Wendy's stock jumps 15% on $1.4 billion buyout offer

Wendy's shares rose approximately 15 percent during morning trading on Wednesday, October 28, following a regulatory filing that revealed a bid to take the company private. The proposal values the fast-food chain at $1.4 billion. This surge marks a sharp reversal for a stock that has declined 65 percent over the last two years.

The offer comes from a group of investors led by Nelson Peltz's Trian Fund Management. They are proposing to pay $7.35 per share in cash. That price is 20 percent higher than the closing price on Tuesday. Joining Trian in this effort are BlueFive Capital, Sixth Street Partners, and Flynn Group. Flynn Group is one of the largest franchisees for Wendy's. The Wall Street Journal first reported the details of this proposal.

Trian and its affiliates currently hold a 16.25 percent stake in Wendy's. This makes them the largest shareholder in the company. Trian declined to comment beyond the information provided in the filing. Wendy's did not immediately respond to requests for comment from CNBC. The company is scheduled to release its third-quarter earnings before the market opens on November 5.

The bid arrives after a difficult period for the chain. Wendy's has reported declines in same-store sales for six consecutive quarters. Industry analysts note that budget-conscious customers are dining out less frequently. Wendy's and its competitors have relied heavily on discounts to attract customers back to restaurants. The company has also changed chief executives several times, with each leader offering a different strategy to revitalize the business.

Bob Wright, the former CEO of Potbelly, joined Wendy's in May. On his first earnings call with analysts in August, Wright identified specific operational issues. He cited unclear value offerings and inconsistent execution in restaurants. He also pointed to an overabundance of one-off promotions as key problems. Wright previously led Potbelly before that company was taken private.

Peltz has a long history with the Wendy's brand. He led an activist campaign against the company more than two decades ago. Trian also investigated a potential takeover in 2022 but decided not to proceed at that time. The current financial state of the brand has made it a more attractive target for the investment firm.

TD Cowen analyst Andrew Charles wrote in a client note on Wednesday that a buyout is a logical step. He argued that the turnaround will likely be prolonged due to the challenges facing lower-income consumers and the soft state of the quick-service burger category. The filing confirms the specific terms of the cash offer and the composition of the buying group.