New Home of the Whopper
Burger King may not have it its way, but the QSR finally has new owners. More than two years after London-based Diageo first put the fast food chain on the block, and almost six months after initially striking a deal with a private equity consortium, the sale went through in December with a price tag of $1.5 billion.
The new owners include equity firms Texas Pacific (of which BK chairman John Dasburg is a member), Bain Capital, and Goldman Sachs Capital Partners. The transaction hit a bump when the consortium asked to revise terms of the agreement, enacting a clause that stated BK had to meet certain performance conditions to get the original minimum price of $2.1 billion.
In the end, however, Diageo, which was more intent on unloading the QSR to focus on its liquor line, agreed to drop the price by almost a third to $1.5 billion. “We are pleased that we’ve been able to reach this agreement despite a difficult market and at a time of tough trading conditions for the quick service restaurant sector,” said Diageo CEO Paul Walsh in a statement. “We continued to review our options but concluded that this transaction with this buying group was the most certain route to achieving separation.”
Diageo received $1.2 billion in cash and the consortium will assume all of Burger King’s $86 million debt. “The change in financial terms will reduce the company’s debt burden and strengthen its capital structure,” said Dasburg. “This will better position BKC as a healthy, independent company for the first time in more than 30 years.”
Despite overhauling its menu earlier this year, restaurant sales slumped five percent between September and November. The chain’s largest franchisee, AmeriKing — which operates 329 restaurants — filed for bankruptcy.
