Burger King accepts 3G offer

NEW YORK—Burger King has agreed to a $4-billion offer from 3G Capital, consisting of $3.26-billion cash plus assumption of the company’s debt load. Shareholders will receive $24 for each share in North America’s second largest burger chain, behind McDonald’s.

Burger King’s board has approved the sale, which is expected to close in the fourth quarter of 2010.

3 G said it would name a former transportation executive from Latin America as chief executive officer of the restaurant chain after the purchase is completed.

Bernardo Hees was chief executive officer of America Latina Logistica, a large railroad and logistics company and a partner in 3G capital which has Brazilian investors.

Anheuser-Busch InBev also has a stake in the investment company. Hees joined 3G as a partner in July. He will take over at Burger King from John Chidsey who will share the post of chairman with Alex Behring, managing partner at 3G.

Ron Paul, president and founder of food industry consulting and research firm Technomic, said last month that the company has no choice but to look at closing unprofitable units as it takes on McDonald’s.

“Closures are definitely on the horizon. They (McDonald’s) are the big gorilla,” Paul said. “It’s not just the burger chains. They are also losing market share to people like Subway.”

Paul said he expects to see Burger King launch a very aggressive marketing strategy to win back some of its customers.

The company has more than 12,000 locations worldwide, including 300 in Canada. Franchised operators own most of Burger King restaurants. 

In its fourth-quarter results, Burger King Holdings Inc. reported a drop in same store sales of 1.5 per cent in the United States and Canada. This compares with a 4.5 per cent drop a year ago.

For the entire fiscal year same store sales in the U.S. and Canada were down 3.9 per cent, compared with a slight rise of 0.4 per cent the previous year.

Worldwide, the net restaurant count increased 2.1 per cent, with more than 90 per cent of that growth outside the U.S. and Canada.

Chidsey said in a release that Burger King is “laser-focused on the U.S. and Canada fall launch of our enhanced breakfast platform that will include several new breakfast products and will feature Seattle’s Best Coffee.”

Some restaurants in the U.S. started testing a brunch menu in the spring, offering a ciabatta breakfast sandwich and a drink made with orange juice and Sprite.

Last month it unveiled nine new breakfast items. These include a breakfast platter with roasted potatoes, onions and peppers, sausage and eggs; pancakes; and a ciabatta club sandwich.