Under the terms of the deal, 3G Capital will pay $24 a share, a 46 percent premium to Burger King’s share price before reports emerged that the fast-food giant was in sales talks, through a tender offer.
The deal marks the continued ascendancy of Brazil as a big corporate player. Among 3G’s backers is the billionaire Jorge Paulo Lemann, who also serves on the board of Anheuser Busch InBev.
3G views Burger King as a turnaround opportunity, one that draws upon the operational expertise gained in its beer and retail investments.
“We have great respect for the Burger King brand and the strong business that management, the employees and the franchisees have built,” Alexandre Behring, a 3G managing partner, said in a statement. “The iconic Burger King brand, its solid franchisee network and great product offerings make this a perfect fit for 3G Capital, which has a strong track record of long-term investments in global consumer brands and retail companies.”
Burger King’s chairman and chief executive, John Chidsey, is expected to retain his current roles until the deal closes. After that, he will take on the title of co-chairman alongside Mr. Chidsey.
Burger King has struggled lately: Last week it forecast weak demand for its new fiscal year amid high unemployment in the United States and economic weakness in Europe. It also cautioned that uncertainty regarding the costs of wheat and beef could affect its results.
The fast-food giant was last taken private in 2002 by a trio of buyout firms — TPG Capital, Bain Capital and Goldman Sachs’s private equity unit — but since returning to the public markets in 2006, it has underperformed its biggest rival, McDonald’s. From its initial public offering until Tuesday, before reports of a potential sale emerged, Burger King has seen its shares fall about 6 percent, according to Standard & Poor’s. During the same time period, McDonald’s stock has climbed 111 percent.
Among 3G’s plans for the fast-food chain is building out the fast-food chain internationally. Burger King already has 93 restaurants in Brazil and plans to open about 500 new franchises in Latin America over the next five years, the company disclosed in a regulatory filing.
3G already has some experience in burgers and fries, having previously invested in Wendy’s.
3G expects to begin its tender offer no later than Sept. 17 and to close the deal in the fourth quarter this year. Burger King has the right to solicit higher offers through Oct. 12 under what is known as a “go-shop” period.
Burger King was advised by Morgan Stanley, Goldman Sachs and the law firms Skadden, Arps, Slate, Meagher & Flom and Holland & Knight. 3G was advised by Lazard, JPMorgan Chase, Barclays Capital and the law firm Kirkland & Ellis.
No comments:
Post a Comment