LAVCA VC
  • News Feed
  • VC Data
  • Directories
  • Features
  • Tech Growth Coalition
  • LAVCA Gender Diversity
  • Engage
    • VC Council
    • VC Members
  • LAVCA
  • Member Login
  • Member Access

LAVCA VC

  • News Feed
  • VC Data
  • Directories
  • Features
  • Tech Growth Coalition
  • LAVCA Gender Diversity
  • Engage
    • VC Council
    • VC Members
  • LAVCA

Brazilian-backed 3G Capital buys Burger King for $3.3B

2 September 2010

(Bloomberg) September 2, 2010 – Burger King Holdings Inc. agreed to be acquired by 3G Capital, a New York investment firm backed by Brazilian investors, for $3.3 billion in the biggest restaurant acquisition in at least a decade.

The $24-a-share price is 46 percent more than Miami-based Burger King’s close Aug. 31, before reports of a deal surfaced. Under the terms of the agreement, the second-largest U.S. burger chain can solicit superior bids through Oct. 12, according to a statement today.

The chain’s sales growth has slowed for two straight years as consumers ate out less during the U.S. economic slump. Burger King, which trails only McDonald’s Corp. in the U.S., has seen a slower recovery than its larger rival as its clientele suffered more from the recession, said Tom Forte, an analyst at New York- based Telsey Advisory Group.

“Burger King’s heavy user — young, male, and more likely to be a minority — has had a higher rate of unemployment than the McDonald’s consumer,” Forte said in a telephone interview.

The transaction with New York-based 3G amounts to about $4 billion including debt. The purchase would eclipse the 2007 sale of OSI Restaurant Partners Inc., the parent of Outback Steakhouse, as the biggest restaurant deal since Bloomberg started compiling data more than a decade ago.

Burger King rose $4.73, or 25 percent, to $23.59 at 4:02 p.m. in New York Stock Exchange composite trading. The gain was the largest since May 2006, when the company went public.

Trading of bullish Burger King options surged to a record Aug. 25, a week before today’s announcement. Volume for calls to buy the stock jumped Aug. 25 to 37,427, or almost 20 times the average during the preceding four weeks, data compiled by Bloomberg show. Call trading exceeded that level yesterday, reaching 54,284, after the Wall Street Journal said the company was in talks to be sold.

Deal Valuation

The deal values Burger King at 9 times earnings before interest, taxes, depreciation, and amortization in the year ended June 30. Over the past five years, U.S. restaurant acquisitions closed at a median multiple of 8.2, according to Bloomberg data.

Transactions in the restaurant industry have picked up as the U.S. economy begins to recover, with rival chains such as Wendy’s/Arby’s Group Inc. attracting interest. 3G has shown interest in fast-food chains in the past, disclosing last year that it owned about 4.2 million shares of Wendy’s/Arby’s. 3G’s disclosure of holdings as of June 30 didn’t show any Wendy’s/Arby’s shares.

3G is an investment vehicle whose main investors are three Brazilian business partners — Jorge Paulo Lemann, Marcel Herrmann Telles and Carlos Alberto da Veiga Sicupira, according to three people with knowledge of the matter. The men founded Brazilian investment bank Banco de Investimentos Garantia SA and agreed to sell to Credit Suisse Group AG in 1998 for at least $675 million.

Lemann’s Background

Lemann, 71, whose personal fortune was estimated by Forbes magazine at $11.5 billion this year, and his partners also own stakes in Anheuser-Busch InBev NV, the world’s biggest brewer, and Brazilian retailer Lojas Americanas SA.

3G is run by managing partner Alexandre Behring, who joined in 2005 after previously working at a buyout firm founded by Lemann. Before the Burger King deal, 3G focused mostly on investments in public equities. In a U.S. regulatory filing, it disclosed holdings of about $1 billion in stocks as of June 30, including its biggest position, CSX Corp.

3G in 2007 joined with London-based TCI Fund Management LLP to start a proxy contest for board seats at CSX, the largest U.S. railroad. Behring eventually won a seat.

Chidsey’s Role

John Chidsey, Burger King’s chief executive officer, will remain CEO through a transition period, according to the statement. Chidsey will then become co-chairman of the board along with Behring.

Burger King gets about two-thirds of its revenue from the U.S. and Canada. The chain also operates in Latin America, Europe and parts of Asia. Total sales fell 1.4 percent to $2.5 billion in the year ended June 30, Burger King said last week.

TPG Inc., Bain Capital LLC and Goldman Sachs Group Inc. bought Burger King from Diageo Plc in 2002 before selling shares to the public again four years later. The three own about one- third of Burger King and agreed to tender their shares into the offer.

Lazard Ltd., J.P. Morgan Securities LLC, and Barclays Capital advised 3G. Burger King was advised by Morgan Stanley and Goldman Sachs Group Inc. 3G Capital’s legal advisers were Kirkland & Ellis LLP, and Burger King’s were Skadden, Arps, Slate, Meagher & Flom LLP and Holland & Knight LLP.

By Duane D. Stanford and Burt Helm

Brazilian-backed 3G Capital buys Burger King for $3.3B was last modified: September 8th, 2010 by Editor
BrazilDealFood
0
Facebook Twitter Google +

Tech Growth Membership

The 2023 LAVCA Startup Founders Survey is made possible thanks to the support of LAVCA’s Tech Growth Membership, a group of leading tech companies and investors advancing the tech ecosystem in Latin America including AWS, Mercado Libre, Microsoft, Qualcomm Ventures, SVB, Riverwood Capital, Google and Movile.

VC Partner Events

    Tweets

    Missing consumer key - please check your settings in admin > Settings > Twitter Feed Auth

    Submit VC News

    Have private equity or venture capital related news that you would like to share? Submit your press releases and news to [email protected].

    VC Industry News

    • Valor Capital Group and NFX Co-Lead USD9.3m Series A for Brazil’s Praso

      30 August 2023
    • EQT Growth Leads USD85m Series F for Brazil’s Gympass at USD2.2b Valuation

      23 August 2023
    • Tiger Global Leads USD61m Series B for Brazil’s Nomad 

      22 August 2023
    • NASZCA and IDB Invest Lead USD15.5m Series A for Mexico’s Wonder Brands

      17 August 2023
    • Victory Park Capital Provides USD100m Credit Facility for Mexico’s Klar

      15 August 2023
    • General Catalyst Lead USD45m Series B for Brazil’s Tractian

      7 August 2023
    • General Catalyst Leads USD45m Round for Brazil’s Tractian

      7 August 2023
    • ADQ Provides USD100m In Convertible Debt to Brazil’s Loft

      2 August 2023
    • Danish SDG Investment Fund Leads USD31.5m Series C for Mexico’s Bright  

      27 July 2023
    • Colombia’s Foodology Raises USD17m from Andreessen Horowitz, 30N Ventures and Chimera

      19 July 2023

    About LAVCA

     

    LAVCA is the Association for Private Capital Investment in Latin America, a not-for-profit membership organization dedicated to supporting the growth of private capital in Latin America and the Caribbean through research, education, networking and advocacy.

    LAVCA Office

        New York City:
        589 8th Ave, 18th Floor
        New York, NY 10018

    Explore LAVCA.org

    • About LAVCA
    • Board, Team, & Advisors
    • Media
    • Contact Us
    • Membership Benefits
    • Members Only Access
    • Education and Programs
    • Research
    • Policy
    • LAVCA VC
    • Contact Us

    @2020 - LAVCA. All Rights Reserved.


    Back To Top