Market Overview

Burger King Plans to Offer Stock, not Just More Food Choices

Soon lovers of Burger King will be able to buy more than a whopper, they'll be able to buy stock.

Burger King Worldwide Holdings was acquired by New York-based 3G Capital in September 2010 for $3.3 billion, the largest restaurant acquisition deal in more than a decade, and was taken off the public market. It plans to make a comeback after a $1.4 billion cash sale of a 29% stake to Justice Holdings (JUSH), a London-based acquisition company. The two companies announced the deal yesterday.

Justice Holdings had its initial public offering 14 months ago, with the goal of investing in a company. Shares will stop trading on the London Stock Exchange after the deal is complete and Burger King Worldwide will appear on the New York Stock Exchange, though it is unclear if it will have different ticker than the “BKC” used when the company was traded on the Nasdaq Stock Exchange.

Growth strategy will not change as a result of going public and there are no plans to change senior leadership, said Burger King Chief Financial Officer Daniel Schwartz. The company will focus on strengthening its brand. Last year Burger King lost its place as the No. 2 US burger chain, behind McDonalds (NYSE: MCD), to Wendy's (Nasdaq: WEN) for the first time. Burger King accounted for about 12% of sales at burger chains in 2011. McDonalds could claim credit for half.

"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, a Justice Holding founder.

The stock announcement comes the day after the unveiling of a new menu at Burger King, a 10 food item expansion that is the largest since the chain was started in 1954. The menu change shows a shift in focus from young men to more health-conscious consumers – and many similarities to the menu at rival McDonalds.

Burger King will also modernize the look of stores at an average price tag of more than $275,000 per restaurant. There are more than 12,500 Burger King restaurants worldwide, about 90 percent are franchises, meaning owners will have to buy in to the new look. More than 1,000 are expected to be updated in the next year.

Burger King earned $580.6 million in the fourth quarter, 0.7% less than a year earlier. Sales increased the most in Latin America, the Caribbean, Europe, the Middle East and Africa, according to a statement released last month.

Posted-In: News Retail Sales IPOs Best of Benzinga

 

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