Billionaire Nelson Peltz, Wendy's chairman, said Friday that he won't pursue buying the fast-food chain, according to an SEC filing.
He serves as CEO of Trian Fund Management, the chain's largest shareholder, which owns nearly 20 percent.
The activist hedge fund told Wendy's board in May that it would explore and evaluate a potential transaction alone or with third parties to “enhance shareholder value.” However on Thursday, Peltz notified the board that he won't move forward with this transaction. Instead, he advised that because of Wendy's sales momentum and liquidity strength, the best way to maximize shareholder value would be through stock repurchases and increased cash dividends. In conjunction with this announcement, Wendy's said it will double its quarterly dividend to $0.25 per share and implement a $500 million share repurchase.
"Trian believes that the Company is well-positioned to deliver significant long-term value for shareholders and looks forward to continuing to work with the Board and leadership team to do so," Peltz said in a statement.
Wendy's U.S. same-store sales rose 5.9 percent in Q4, lapping a 6.1 percent increase in 2021. Internationally, comps lifted 9.9 percent, on top of an 18.1 percent bump in 2021. The chain has experienced 12 consecutive years of global same-store sales growth. In 2022, global comps grew 4.9 percent year-over-year and 14.9 percent on a two-year stack. In terms of development, Wendy's opened a net of 276 restaurants globally, including 139 in the U.S. and 137 internationally. Nearly 40 new franchisees were approved in 2022 as well.
The sales strength, combined with softer inflation, led to an almost 300-basis-point improvement in company-operated margin. Adjusted EBITDA for 2022 was $498 million, 6.6 percent better than 2021.
Along with Peltz's news, Wendy's also revealed an organizational restructure aiming to build "a unified voice, approach, and operating model." Wendy's CEO Todd Penegor said it was about thinking more globally—instead of the U.S. and international business separately—when it comes to unit growth, digital activation, and technology.
As part of the redesign, Kurt Kane, U.S. president and chief commercial officer, was let go and his positions were eliminated. Leigh Burnside, chief accounting officer and CFO of the U.S. business, resigned to become CFO at another restaurant company. Suzanne Thuerk, vice president of accounting, was promoted to chief accounting officer as a replacement.
"As you take some layers out of the organization, it allows us speed of decision-making, it can drive focus, it will drive efficiency, it will drive productivity," Penegor told investors Friday. " ... It is around driving traditional new restaurant development without any distractions and things that we chased during the course of this past year. Continue to drive more digital demand and really raises the bar on the operational excellence of everything we do at the restaurant level, where we continue to build our breakfast business. So it's as simple as that."
Penegor noted that having two business unit presidents with autonomy served Wendy's well, but emphasized the need for a global mindset.
"It will put me a lot closer to the business," the CEO said. "And as we sit around the table as a senior leadership team, having a global marketing mindset, talking about operations with a focus on the U.S. and international, it will help speed to decision-making. We'll make sure that we got one message to the entire organization, both U.S. and international. And I do think it will make us a lot more effective, so we can go faster to continue to drive and accelerate the results that we've seen behind our key strategic growth pillars that we've been very focused on the last couple of years. So I see a lot of benefit from all of that."