Burger King going private, again

A sign stands outside a Burger King restaurant in San Francisco, Calif.

TEXT OF STORY

Kai Ryssdal: There was a big buyout on the corporate radar screen today -- you might even call it a Whopper. The private equity firm 3G Capital snapped up Burger King for about $4 billion. That's 46 percent more than the company's stock was worth. Speaking of stock, the deal means Burger King won't be publicly traded anymore. It's going private for the second time in eight years.

Marketplace's Stacey Vanek Smith has more.


Stacey Vanek Smith: Burger King has been hammered by the downturn.

Steve West, an analyst at Stifel Nicolaus, says part of the problem is Burger King bet on its best customers, lower-income, young men. They've been hit hard by unemployment. West says going private could help BK invest in widening its appeal.

Steve West: They can take on more debt, reinvest that in the brand to an extent that the current management team wasn't able to do, because it was a public company and it would be frowned upon.

West says Burger King can use that money to spruce up its stores, which average about 20 years old. But Sanford Bernstein analyst Sara Senatore is skeptical.

Sara Senatore: Burger King has already been owned by a private equity company. So the idea that there would now be an opportunity to take it private and really fix this business, it's a little bit surprising that somebody would see that.

Senatore says Burger King is working to appeal to more customers, like partnering with Twilight to draw in young women. And the new private owners could borrow and not invest in improving the company, says analyst Steve West.

West: They could do what the last private equity group did, pay themselves a nice little dividend with that money.

That debt is one of the reasons Burger King can't borrow as a public company now.

I'm Stacey Vanek Smith for Marketplace.

Comments

I agree to American Public Media's Terms and Conditions.
With Generous Support From...