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Burger King to return to NYSE

by Laura Board in London | Published April 4, 2012 at 9:40 AM

Burger King Worldwide Holdings Inc. Tuesday, April 3, announced plans to return to the stock market through a complex deal involving a London-listed consumer sector acquisition vehicle.

New York- and Rio de Janeiro-based 3G Capital, which bought Burger King in September 2010 for about $4 billion including debt, will sell a stake in the Miami fast-food restaurant chain to London's Justice Holdings Ltd. for $1.4 billion and retain 71% ownership.

On completion of that sale the enlarged company, by now 29% owned by Justice shareholders and founders, will be incorporated in Delaware and renamed Burger King Worldwide Inc. Justice's shares will be suspended in London and the newly formed entity will begin trading on the New York Stock Exchange.

The combined company will be 10%-owned by hedge fund Pershing Square Capital Management LP, which will receive the holding in exchange for its Justice shares. It was unclear when and by how much investors in the new entity will cut their holdings.

Justice was founded in February 2011 by a group of well-known City figures and is chaired by Paul Myners, a peer who served as City minister in the government of former Prime Minister Gordon Brown during the credit crisis.

Justice co-founder William A. Ackman, who is founder and CEO of Pershing Square, took credit for orchestrating the Burger King deal in the statement. He noted that under 3G, Burger King's Ebitda before capital expenditure has increased from $320 million in 2010, to $503 million in 2011, with 2012 Ebitda before capital expenditure expected to be nearly double that of 2010.

"As importantly, Burger King's management has made substantial progress in accelerating international growth through the formation of joint ventures with third-party capital sources and local operators," he said. "As a result of management's initiatives and the power of this global brand, I am confident this will be an excellent investment for Justice shareholders."

Ackman, who is also an investor in 3G, will receive stock rather than cash in the transaction, to avoid accusations of a conflict of interest. Ackman said he would retain his personal Burger King stake even after Pershing is no longer an investor.

Justice's other co-founders include German-American investor Nicolas Berggruen and Martin E. Franklin, chairman of consumer-products maker Jarden Corp.

Justice held an IPO in February 2011 with a mandate of making a transaction worth between $2 billion and $10 billion in enterprise value "which creates long-term shareholder value for Justice shareholders. " The Burger King deal has an enterprise value of about $8 billion, Burger King CFO Daniel Schwartz told Reuters. Burger King's CEO is Bernardo Hees. Both Hees and Schwartz are 3G partners.

3G was founded in 2004 by Brazilians Jorge Paulo Lemann, Marcel Telles, former CEO of AmBev, Carlos Alberto Sicupira, former CEO of Brazilian retailer Lojas Americanas SA, and Roberto Thompson Motta.

Its founders helped orchestrate the merger of Brazil's AmBev with Belgium's Interbrew in 2004, creating InBev SA/NV, which later combined with Anheuser-Busch Cos. to form Anheuser-Busch InBev NV/SA. All four 3G founding partners are directors at Anheuser-Busch InBev, representing AmBev shareholders through Luxembourg vehicle BRC Sarl.

The Burger King transaction was unanimously approved by the boards of directors of both companies, and requires no further shareholder approvals.

Other necessary clearances include antitrust approval, and the Securities and Exchange Commission's go-ahead. The transaction closing and listing is expected to occur within 90 days.

Tegris Advisors acted as lead adviser to Justice and Barclays Capital gave a fairness opinion to Justice's board. Greenberg Traurig PA and Sullivan & Cromwell LLP acted as legal counsel to Justice on the transaction.

Kirkland & Ellis LLP lawyers including Stephen Fraidin, William Sorabella, Joshua Korff, David Feirstein, Joshua Soszynski and Neil Dugal represented Burger King Worldwide and 3G Capital.

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