Key Highlights

● Trian proposed taking Wendy's private.

● A private equity firm made a competing cash offer for LCI Industries.

● Ultralife agreed to be acquired by a corporate buyer.

● High-yield credit spreads tightened, suggesting open financing markets.

Private equity and investment firms showed fresh appetite for smaller US public companies, as Trian Fund Management proposed taking Wendy's private, according to reports, and a private equity firm made a cash offer for LCI Industries. Both stocks surged. Separately, Ultralife more than doubled after agreeing to be bought by a corporate buyer, adding to a day of takeover action in small caps.

Trian submitted a non-binding proposal to acquire Wendy's for $7.35 a share in cash, or about $1.4 billion, a bid that comes after the chain posted six straight quarters of same-store sales declines.

LCI's Rival Bid

The private equity firm made a non-binding offer of $101 a share in cash for LCI Industries, which shares jumped on but traded below the offer price, since LCI's board still backs its existing all-stock merger agreement, setting up a choice between a cash offer and the stock deal.

Smaller public companies can attract private buyers when their share prices lag or when the costs and scrutiny of being public outweigh the benefits, with taking a company private potentially giving owners more freedom to restructure without quarterly reporting pressure.

Financing Conditions

Private equity deals depend heavily on borrowed money, so credit conditions matter, and the Federal Reserve left its benchmark rate range unchanged, with long-dated Treasury yields climbing, raising borrowing costs for buyouts.

High-yield bond spreads tightened the same day, however, a sign some read as lenders remaining willing to fund riskier deals, even as Fed Chair Kevin Warsh said some credit spreads have widened and financial conditions have tightened for some businesses.