Wendy’s Turns Down $1.4 Billion Buyout and Adopts a ‘Poison Pill’ Defense to Block a Takeover

Wendy’s is saying thanks but no thanks to Nelson Peltz. The burger chain’s independent directors unanimously rejected the activist investor’s $1.4 billion buyout offer, saying it “substantially undervalues” the company, according to the Associated Press.

The chain also adopted a shareholder rights plan, known as a “poison pill,” to fend off a hostile takeover. If any person or group reaches a 15% stake, every other shareholder gets the right to buy discounted stock. Peltz’s Trian Fund Management and its partners already hold 16.3% of Wendy’s shares. The plan stays in place for one year.

Peltz argues that inflation, squeezed consumers and tougher competition make his bid the best path for shareholders. CEO Bob Wright, who joined from Potbelly in May, told investors Wendy’s has “the right strategy, execution and resources” to turn things around. Shares rose more than 2% Thursday after better-than-expected third-quarter results.

Wendy’s plans to close up to 358 older U.S. restaurants this year. Its share of U.S. burger chain sales slipped from 11.5% in 2019 to 10.4% last year, according to Technomic.