Key Highlights

● Trian proposed buying Wendy's for $7.35 a share in cash.

● The deal would value the company at about $1.4 billion.

● The proposal is non-binding and backed by other investors.

● Wendy's has posted six straight quarters of same-store sales declines.

Wendy's (NASDAQ:WEN) jumped after Trian Fund Management, the investment firm led by Nelson Peltz, submitted a non-binding proposal to take the burger chain private at $7.35 a share in cash, according to a filing and a Wall Street Journal report. The proposal values the company at about $1.4 billion and is backed by BlueFive and Sixth Street, with Wendy's saying its independent directors would evaluate it.

The shares climbed at a double-digit pace, making Wendy's one of the most-talked-about names of the session.

What the Offer Means

A take-private proposal means a buyer offers to purchase all outstanding shares, after which the company would no longer trade on a stock exchange. The key word is non-binding: the board's independent directors will review it, and they could accept it, negotiate for better terms, seek other bids or reject it.

The gap between where the stock traded and the $7.35 offer price reflects that uncertainty, a pattern common when investors weigh the odds and timing of a deal before financing, due diligence and shareholder approval are secured.

A Challenging Backdrop for the Chain

Trian has a long history with Wendy's and has been one of its largest shareholders for years, giving the proposal a different backdrop than an outside bid. That history arrives against a challenging stretch for the chain, which has reported six straight quarters of declines in same-store sales.

Taking a company private can give owners more room to restructure operations, invest or change strategy without the pressure of quarterly public reporting.