Shares of Wendy’s Co (NASDAQ: WEN) are up nearly 15% on Wednesday after Trian Fund Management LP said it was interested in taking over the American fast-food chain.
Why is Trian exploring a potential deal?
The hedge fund already has a 19% stake in Wendy’s that makes it the firm’s largest shareholder. Trian is exploring a potential merger or acquisition to “enhance shareholder value”.
The asset management company has Wendy’s on its portfolio since 2005. But in a recent SEC filing, Trian said:
At that time, Wendy’s was one of America’s most beloved brands, but the business has lost its way after the passing of its founder Dave Thomas.
The Dublin-headquartered company is still trading more than 20% down versus the start of the year.
MKM Partners sees another 25% upside in WEN
At present, Trian has three board seats at Wendy’s. It has previously pushed the fast-food company to cut its overhead costs and improve operations.
Earlier in May, the Nasdaq-listed company reported its financial results for the first quarter that came in shy of Wall Street estimates. According to MKM Partners, a potential deal could see the stock climb further from here.
We believe WEN’s current prospects can be effective on their own, but view the potential for additional growth prospects and gains through a strategic or scaling partnership, or shifts to the model, as worthy points of consideration.
MKM analyst Brett Levy rates Wendy’s at “buy” with a price target of $23 a share, or another 25% upside from here.
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