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Burger King Agrees to Buyout

(Burger King buyout article updated with additional commentary and stock price movement.)

MIAMI ( TheStreet) -- Shares of Burger King Holdings (BKC) surged for the second day as the Whopper-and-fries chain agreed to be taken private by 3G Capital for $4 billion, with the assumption of the company's debt.

Under the terms of the deal, Burger King shareholders will receive $24 in cash per share, a 45.9% premium to Burger King's closing price on Tuesday, before rumors of the buyout began circulating on Wall Street. It will be the second time in eight years that Burger King has taken itself private.
Burger King

3G is led by Alexandre Behring, a former railroad executive who sat on the board of Jacksonville, Fla.-based CSX (CSX). Behring spent a decade with Latin American private equity firm GP Investments.

"We have great respect for the Burger King brand and the strong business that management, the employees and the franchisees have built," Behring said. "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 CEO and Chairman John Chidsey is expected to remain in his post until the buyout is closed, after which Behring and Chidsey will be co-chairmen.

Burger King shares soared 24.7% in late-afternoon trading on more than 40 times their average trading volume.

Stifel Nicolaus analyst Steve West told TheStreet that now is a good time to sell Burger King shares, arguing that the stock is unlikely to rise much higher.

Some arbitration shops may still make some money on the stock, potentially filing suits arguing for a higher-priced deal, but "I don't think any more upside will be material," he said.

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The $24 per share agreement bested the estimates of UBS (UBS) analysts, who expected Burger King to fetch between $19 and $22 per share. The firm also predicted that a string of private-equity takeovers of fast-food chains is likely to follow, given the strong performance of industry darlings McDonald's and Chipotle Mexican Grill (CMG - Get Report).
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