Exclusive-Activist investor Blackwells plans Wendy’s board challenge -sources

© Reuters. A Wendy’s Co restaurant is pictured in Monrovia, California November 4, 2015. Burger chain Wendy’s Co reported better-than-expected quarterly same-restaurant sales, pulling in customers in North America with an expanded menu and refurbished restaurants.

By Svea Herbst-Bayliss

(Reuters) -Activist hedge fund Blackwells Capital is preparing to challenge Wendy’s (NASDAQ:WEN) Co’s board of directors in a push for improvements to the fast food chain’s financial performance, people familiar with the matter said on Friday.

Blackwells, run by Jason Aintabi, plans to nominate several directors to Wendy’s 12-member board, said the sources, who asked not to be identified discussing confidential deliberations.

The challenge pits Blackwells against another activist hedge fund, Trian Fund Management, which owns a 16% stake in Wendy’s and has three representatives — Trian CEO Nelson Peltz, Trian President Peter May and Trian research co-head Matthew Peltz — serving on the Dublin, Ohio-based company’s board.

Blackwells antagonized Trian this week over Walt Disney (NYSE:DIS) Co. Blackwells issued a statement on Thursday criticizing Trian for its attempted board challenge against the entertainment giant and came out in support of Disney CEO Bob Iger.

In the same statement, Blackwells said of Wendy’s that Peltz had installed his son Matthew as non-executive vice chairman and “packed the board with business partners and friends, while presiding over a period of disappointing results for Wendy’s shareholders.” It made no mention of any plans to challenge the Wendy’s board.

Blackwells declined to comment further on Friday.

“We welcome dialogue with all Wendy’s shareholders,” Nelson Peltz and Arthur Winkleblack, Wendy’s lead independent director said on Friday. “Our board and management does not have a monopoly on good ideas. In the spirit of good corporate governance, we are more than happy to engage with any shareholder to discuss their views and, as always, we are open to adding any new board member who can add value.”

The size of Blackwells’ stake in Wendy’s could not be learned.

Shares of Wendy’s closed trading up 4.2% on Friday at $19.54, giving it a market value of about $4 billion.

Wendy’s had seen its stock price drop 15% this year prior to the news of Blackwells’ plans, amid investor concerns about decelerating growth in its same-restaurant sales. By comparison, competitor McDonald’s Corp (NYSE:MCD)’s stock price has risen 7.33%, Shake Shack Inc (NYSE:SHAK)’s is up 46% and Restaurant Brands International Inc (NYSE:QSR), which owns Burger King and other fast food chains, has climbed 11% this year.

Blackwells made headlines last year when Aintabi pushed exercise bike maker Peloton Interactive (NASDAQ:PTON) Inc to fire its CEO John Foley and to explore a sale. Peloton replaced Foley but has not sold itself.

Trian explored taking Wendy’s private last year but announced in January that it would no longer pursue this option.

Wendy’s reported adjusted third-quarter earnings per share of 27 cents last month, beating analysts’ average estimate of 25 cents. Yet it posted same-restaurant sales growth of 2.8% globally and 2.2% for the United States that were lower than a year ago. In the third quarter of 2022, Wendy’s had reported global same-restaurant sales growth of 6.9% and U.S. same-restaurant sales growth of 6.4%.

Founded in 2005, Trian is one of the world’s biggest activist investors. Its previous investments include Procter & Gamble (NYSE:PG), Unilever (LON:ULVR) Plc and Janus Henderson Group (NYSE:JHG) Plc.