Wendy’s Co., the third-largest U.S. burger chain, announced plans to repurchase $1.4 billion in stock, including a portion of the stake owned by its largest shareholder, Nelson Peltz’s Trian Fund Management.
As part of the move, the company will start buying back $850 million in stock on Wednesday, with a tender offer to acquire as much as $639 million at $11.05 to $12.25 a share. The fast-food chain plans to make the remaining $550 million in buybacks by the end of 2016, according to a statement.
Wendy’s Chief Executive Officer Emil Brolick is stepping up shareholder rewards at a time when fast-food competition is intensifying. The company trimmed its annual earnings forecast to 31 cents to 33 cents a share on Wednesday, down from as much as 35 cents previously. The company also has been streamlining operations by selling a bakery business to East Balt Bakeries and putting more of its locations in the hands of franchisees.
The shares rose 3.3 percent to $11.47 at the close in New York. Wendy’s stock has gained 27 percent this year.
Wendy’s, based in Dublin, Ohio, is purchasing $211 million of its stock from Trian. The investment firm -- run by Peltz, who also is Wendy’s chairman -- plans to cut its position in the burger chain to between 17 percent and almost 20 percent. While that’s a significant drop from its current level of about 25 percent, Trian would remain the largest shareholder.
Peltz said in the statement that Trian is making adjustments to its portfolio.
“We are very pleased with Wendy’s ongoing transformation and outlook,” he said. “We look forward to continuing to work closely with other members of the board, along with Emil Brolick and his leadership team.”