Traverse City Record-Eagle

Business

April 5, 2012

Burger King going public — again

THE ASSOCIATED PRESS Associated Press

NEW YORK — Burger King is dusting off its crown and going public again.

The world's No. 2 hamburger chain, which is in the midst of overhauling its menu and stores, says it expects to relist its shares on the New York Stock Exchange within the next three months.

In a deal announced late Tuesday, the New York-based investment firm 3G Capital said it is selling a 29 percent stake in Burger King for $1.4 billion in cash to Justice Holdings Ltd., a London-based shell specifically set up to invest in another company. 3G Capital will keep the remaining 71 percent.

Justice Holding's shares will suspend trading on the London Stock Exchange once the deal is complete. It will then emerge as Burger King Worldwide Inc. and its shares will be traded on the New York Stock Exchange.

Burger King traded under "BKC" between 2006 and 2010 but its new ticker has not yet been determined.

The announcement came just a day after Burger King launched a star-studded TV ad campaign to tout the biggest revamp since the chain opened its doors in 1954.

The overhaul started last year shortly after 3G Capital took the reins at the Miami-based fast food chain and assessed the ailing business from top to bottom. Executives decided to abandon Burger King's outdated strategy of courting young men with calorie-packed monstrosities like the Enormous Omelet and the Burger King Stacker and instead play to a much broader audience.

Among the items launched Monday were coffee frappes, fruit smoothies, specialty salads and snack wraps. The additions mimic many of the popular rollouts in recent years by McDonald's Corp., which has solidified its position as the nation's No. 1 fast food chain by recasting itself as a hip, healthy place to eat.

Daniel Schwartz, Burger King's chief financial officer, said the company's growth strategy will not change and that Burger King will continue to focus on strengthening its brand at home and abroad. He said there will be no changes to the senior leadership as a result of the company going public.

"We believe that Burger King's aggressive plans for international growth will benefit from its visibility as a NYSE-listed public company," said Nicolas Berggruen, one of Justice Holding's founders.

The deal is just the latest change for Burger King, which has undergone a series of owners over the years. In 1967, The Pillsbury Co. bought it for $18 million; then in 1988 Grand Metropolitan PLC bought Pillsbury for $5.79 billion.

About a decade later, Grand Metropolitan merged with Guinness to create a new company called Diageo PLC. That company announced its plans to spin off Burger King in 2000.

Two years later, an equity group comprised of Texas Pacific Group, Bain Capital and Goldman Sachs Capital Partners, purchased Burger King for $1.5 billion. The group took Burger King public in 2006 before it was bought by 3G Capital and taken private in 2010.

Darren Tristano, an analyst with food industry researcher Technomic Inc., has said that part of McDonald's success has stemmed from the company's steady leadership over the years, while Burger King has likely suffered from the constant changing of hands.

Justice Holdings, the latest stakeholders, completed its initial public offering just 14 months ago with the objective to invest in a company.

Among Justice's founders are William Ackman, an activist investor and founder of Pershing Square Capital Management; Martin Franklin, founder and executive chairman of consumer products company Jarden Corp.; Alan Parker, former CEO of Whitbread PLC, the United Kingdom's largest hotel and restaurant company; and investor Berggruen.

In a statement issued by Burger King, Berggruen said that Justice considered several investment opportunities before settling on Burger King. He said the fast food chain stood out because of its position in the restaurant industry and its "strong heritage and an aggressive transformation underway" in North America.

The unusual structure of the deal gives the Burger King's owners, 3G Capital, instant access to cash, said Francis Gaskins, president of the research site IPOdesktop.com.

"They didn't have to go through the time-consuming process of doing an IPO," he said. Justice is already publically held and will simply move the trading of its shares to the New York Stock Exchange, he noted.

As part of the deal, Franklin and Parker will join Burger King's board when the deal closes.

Investment funds managed by Pershing Square will own about 10 percent of the company's outstanding shares, which they will receive as a result of their stake in Justice.

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