This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

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.

>> Bankruptcy Watch: 20 Riskiest Restaurant Stocks

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).

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
CMG $686.93 0.44%
EAT $59.02 0.67%
JACK $91.91 0.05%
MCD $96.18 1.37%
SONC $30.80 1.15%

Markets

DOW 18,034.93 +208.63 1.17%
S&P 500 2,100.40 +19.22 0.92%
NASDAQ 4,994.6020 +62.7870 1.27%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs