3G Capital to buy Burger King for $4 bn

Burger King Holdings Inc said the private equity firm 3G Capital has agreed to buy the US fastfood giant for $4 billion.

"3G Capital announced that it has entered into a definitive agreement with Burger King under which affiliates of 3G Capital will acquire the stock of the company for $24 per share or $4 billion, including the assumption of the company's outstanding debt," Burger King said in a statement.

Under the terms of the deal, 3G will pay a price of $24 a share for Burger King, reflecting a 46 per cent premium to the company's share price before September 1, the day the buy-out talks surfaced.

However, Burger King which is the country's second largest hamburger chain after Mc Donalds, specified that it may still solicit superior proposals from third parties for a period of 40 calendar days until October 12, 2010.

The transaction, if happens, is expected to close in the fourth quarter of this calendar year.

"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," 3G Capital's Managing Partner Alex Behring said.

During the transition period, Burger King's Chairman and CEO John Chidsey will continue in his current capacity and subsequently assume a position of co-chairman of the Board along with Behring upon the closing of the transaction.

Investment firms TPG Capital, Bain Capital and Goldman Sachs Capital Partners bought Burger King in 2002 for about $1.5 billion from the spirits major Diageo PLC, but entered the capital markets in 2006.

Post the Burger King's deal with 3G, the private equity firms still own 31 per cent stake in the company and have entered into agreements with 3G Capital pursuant to which they will tender their shares into the offer.

As per the agreement, 3G Capital will have to commence a tender offer for all of the outstanding shares of the Company before September 17, 2010.

Burger King, which has a market capitalisation of about $2.26 billion, operates more than 12,000 restaurants around the world in more than 75 countries.

The company has faced tough times in the aftermath of the financial crisis. It last week reported a decline of 2.3 per cent in its global sales for 2010 fiscal year, against an increase of 1.2 per cent in the last fiscal.