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Sale to help burger chain fight Big Mac
By Lisa Baertlein |
September 4, 2010, Saturday
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Print Edition
Print Edition
BURGER King Holdings Inc has agreed to sell itself to investment firm 3G Capital for US$3.26 billion, giving the No. 2 United States fast-food chain breathing room to fix its business and close the gap with leader McDonald's Corp.
At US$24 per share, the offer represents a 46 percent premium to Burger King's price before news of the negotiations emerged on Wednesday.
"It was a call out of the blue," Burger King Chairman and Chief Executive John Chidsey told Reuters in an interview when asked about how the talks started. He declined to give additional details.
Chidsey will keep his roles during a transition period and then become co-chairman with 3G Managing Director Alex Behring.
The sale, worth about US$4 billion including debt, is set to close in the last three months of 2010. Burger King has until October 12 to solicit a richer offer from other buyers.
"It looks like a good price for Burger King shareholders. I don't anticipate that someone is going to come in higher," said Telsey Advisory Group analyst Tom Forte.
"The valuation is based on good fundamentals, which Burger King doesn't have and probably won't have for another year," said Stifel Nicolaus restaurant analyst Steve West. On Wednesday, he issued a research note saying that a US$23-per-share price would satisfy shareholders.
Analysts said the deal's valuation -- at almost nine times cash flow over the last year -- is higher than previous restaurant deals and could pave the way for more.
Burger King's private-equity investors took the firm public just four years ago.
At US$24 per share, the offer represents a 46 percent premium to Burger King's price before news of the negotiations emerged on Wednesday.
"It was a call out of the blue," Burger King Chairman and Chief Executive John Chidsey told Reuters in an interview when asked about how the talks started. He declined to give additional details.
Chidsey will keep his roles during a transition period and then become co-chairman with 3G Managing Director Alex Behring.
The sale, worth about US$4 billion including debt, is set to close in the last three months of 2010. Burger King has until October 12 to solicit a richer offer from other buyers.
"It looks like a good price for Burger King shareholders. I don't anticipate that someone is going to come in higher," said Telsey Advisory Group analyst Tom Forte.
"The valuation is based on good fundamentals, which Burger King doesn't have and probably won't have for another year," said Stifel Nicolaus restaurant analyst Steve West. On Wednesday, he issued a research note saying that a US$23-per-share price would satisfy shareholders.
Analysts said the deal's valuation -- at almost nine times cash flow over the last year -- is higher than previous restaurant deals and could pave the way for more.
Burger King's private-equity investors took the firm public just four years ago.
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