Burger King Holdings Inc agreed to be acquired by 3G Capital in a deal valued at $4 billion including debt, giving the New York investment firm control over the second-largest United States hamburger chain.
The $24-a-share price is 46 per cent more than Burger King’s $16.45 close on August 31, before reports of a deal surfaced. Under the terms of the agreement, Burger King can solicit superior bids until October 12, according to a statement today.
The chain’s sales growth has slowed for two straight years as consumers ate out less to deal with the US economic slump. Burger King, which trails only McDonald’s Corp in the US, has seen a slower recovery than its larger rival as its clientele suffered more from the recession, said Tom Forte, an analyst at New York-based Telsey Advisory Group.
“Burger King’s heavy user — young, male, and more likely to be a minority — has had a higher rate of unemployment than the McDonald’s consumer,” Forte said in a telephone interview.
Burger King rose $4.55, or 24 per cent, to $23.41 at 9.32 am in New York Stock Exchange composite trading. The gain was the largest since May 2006, when the company went public.
Transactions in the restaurant industry have picked up as the US economy begins to recover, with rival chains such as Wendy’s/Arby’s Group Inc attracting interest. 3G, based in New York, has shown interest in fast-food chains in the past, disclosing last year that it owned about 4.2 million shares of Wendy’s/Arby’s. 3G’s disclosure of holdings as of June 30 didn’t show any Wendy’s/Arby’s shares.
Behring’s history
3G managing partner Alexandre Behring has ties to fellow Brazilian Jorge Paulo Lemann, having spent a decade at the buyout firm the 71-year-old billionaire founded. Lemann and three of his fellow directors at Anheuser-Busch InBev NV, the world’s largest brewer, also are directors of 3G, according to a regulatory filing from the beer company.
Burger King, led by Chief Executive Officer John Chidsey, gets about two-thirds of its revenue from the US and Canada. The chain also operates in Latin America, Europe and parts of Asia. Total sales fell 1.4 per cent to $2.5 billion in the year ended June 30, Burger King said last week.
TPG Inc, Bain Capital and Goldman Sachs Group Inc bought Burger King from Diageo Plc in 2002 before selling shares to the public again four years later. Those three companies owned about one-third of Burger King as of June 30, according to the latest data compiled by Bloomberg.
