By Karim Hammam
Wendy's has rejected a $1.4 billion buyout offer from activist investor Nelson Peltz, saying the bid substantially undervalues the company.
Independent directors oppose offer
A committee of independent directors unanimously rejected the offer on Wednesday, and the company also adopted a shareholder rights plan, known as a "poison pill," to deter a hostile takeover.
Poison pill details
The plan grants all shareholders except the hostile bidder the right to purchase discounted shares and automatically triggers if a person or group acquires 15% or more of Wendy's shares. Peltz's Trian Fund Management and its partners currently hold 16.3% of the company.
Stock reaction and earnings
Shares of Wendy's spiked 14% last Wednesday after Peltz's offer became public and rose more than 2% Thursday as the company reported better-than-expected third-quarter performance. The poison pill will remain in place for one year.
Business challenges
Wendy's has faced inflationary pressures like other fast-food chains, with lower-income customers reducing visits as the company raised prices to offset rising labor, food and packaging costs.
