THE BOARD of Burger King has agreed for the Miami-based fast-food chain to be taken private for the second time in its history, after accepting a $4 billion (€3.1 billion) bid from 3G Capital, a little-known US investment group backed by Brazilian investors.
New York-based 3G Capital has won the Burger King board’s unanimous approval for its $24-per- share cash takeover bid, which values the burger chain at $4 billion including about $750 million of assumed debt.
Jorge Paulo Lemann, Marcel Telles and Carlos Sicupira, all Brazilian billionaires, are among the big investors in 3G Capital who will be providing the equity to finance the hedge fund’s bid. JPMorgan and Barclays Capital are providing debt for the deal.
Burger King has lagged behind fast-food rivals such as McDonald’s during the recession, but 3G aims to expand by opening new stores in Latin America and Asia.
Burger King has a 40-day “go shop” period to solicit other offers. However, analysts said 3G’s bid valued the burger chain at eight to nine times its earnings before interest, tax, depreciation and amortisation, higher than most recent restaurant deals.
TPG, Goldman Sachs Capital Partners and Bain Capital bought Burger King for $1.5 billion in 2002 from Diageo, the UK spirits group, and took it public in 2006.
The private equity groups, which still own about a third of Burger King, have already made healthy profits and are expected to make a total gain of at least four times their initial investment.
Mr Lemann is Brazil’s third-richest man and number 48 in the world, according to Forbes. He helped build up Ambev, which merged with Interbrew to create InBev and later merged with Anheuser Busch to become one of the world’s largest drinks groups.
Burger King, which has more than 12,150 restaurants, had revenues and net income slip in the year to June 30th. One hope for the company will be that the new owner delivers on its pledge to globalise. Only 38 per cent of restaurants are outside the US and Canada and the five-year plan is to lift that to 60 per cent.
Lazard, JPMorgan and Barclays are advising 3G Capital. Morgan Stanley and Goldman Sachs are advising Burger King. – Copyright The Financial Times Limited 2010
