Investment plans call for Burger King to go public
April 4, 2012
by Jeff Gelski
MIAMI and LONDON — Burger King Worldwide, Inc. will be a newly renamed company that will list and commence trading on the New York Stock Exchange under a definitive business combination agreement announced April 3 between Burger King Worldwide Holdings, Inc., Miami, and London-based Justice Holdings Ltd., a publicly-listed United Kingdom investment vehicle.
“We believe it is the right time for Burger King to be publicly traded in the U.S. again,” said Daniel Schwartz, chief financial officer for Burger King Worldwide. “With this transaction, we are positioning the Burger King brand for long-term growth both domestically and internationally and are excited to take this next step in delivering on our strategic objectives.”
Under the agreement, 3G Capital, a global investment firm and Burger King Worldwide’s principal stockholder, will receive about $1.4 billion in cash and continue as the majority shareholder. The Justice Holdings shareholders and its founders will own about 29% of the combined company.
Co-founders of Justice Holdings have agreed to reduce their founders’ interest to 3% of the combined company’s outstanding shares and have waived the right to receive any other additional equity interests originally contemplated by the Justice structure. Investment funds managed by Pershing Square Capital Management, L.P. will own about 10% of the combined company’s outstanding shares, which it will receive as a result of its interests in Justice Holdings.
Upon closing of the agreement, the combined company will be incorporated in Delaware and will be renamed Burger King Worldwide, Inc. It is expected the company will list and commence trading on the N.Y.S.E. Shares of Justice Holdings will be suspended from trading on the London Stock Exchange.
“We believe that Burger King’s aggressive plans for international growth will benefit from its visibility as a N.Y.S.E.-listed public company,” said Nicolas Berggruen, co-founder of Justice Holdings. “We looked at many different opportunities over the last 14 months, but Burger King stood out as a unique global player in the expanding international quick-service restaurant industry with a strong heritage and an aggressive transformation under way in its North America business unit.”
The Burger King system operates in more than 12,500 locations and serves more than 11 million guests daily in 81 countries and territories. Independent franchisees own and operate about 90% of Burger King restaurants.
Martin Franklin, a co-founder of Justice Holdings, and Alan Parker, one of the independent directors of Justice Holdings, will join the board of directors for Burger King Worldwide. Other members will remain on the board.
“Burger King Worldwide’s long-term strategy and its entire senior management team will remain unchanged,” said Bernardo Hees, chief executive officer of Burger King Worldwide. “In partnership with our new public shareholders, we will continue to focus on creating profitable growth for our franchise system while delivering best-in-class food and service for our guests.”
The boards of directors of both companies unanimously approved the transaction. It requires no further shareholder approvals. The transaction is subject to other customary approvals such as antitrust approval, listing on the N.Y.S.E. and the effectiveness of a registration statement to be filed with the U.S. Securities and Exchange Commission. Closing of the transaction is expected within 60 to 90 days.
“We agree with management that the Burger King brand is still at an early stage of its true potential and believe that over the next three to five years the U.S. turnaround and international growth franchise model can lead to significant margin expansion and free cash flow growth,” Mr. Franklin said.