Burger King to Go Public Again

Burger King will come public through a complex series of transactions. According to the AP:

[T]he New York-based investment firm 3G Capital said it is selling a 29 percent stake in Burger King for $1.4 billion in cash to Justice Holdings Ltd., a London-based shell specifically set up to invest in another company. 3G Capital will keep the remaining 71 percent. Justice Holding’s shares will suspend trading on the London Stock Exchange once the deal is complete. It will then emerge as Burger King Worldwide Inc. and its shares will be traded on the New York Stock Exchange.

Analysts who cover the fast-food industry report that Burger King has lost ground to firms such as Subway and Yum!’s divisions, which include KFC. But a company in third or fourth place is apparently valuable in one of the great global growth industries.

McDonald’s trades near an all-time high and has a market cap of more than $100 billion. It has returned billions of dollars to shareholders recently through dividends and stock buybacks. The firm, which has more than 35,000 locations worldwide, made $5.5 billion last year on $27 billion in sales. Each number is up sharply from 2010, which was up sharply from 2009.

Yum! Brands is a smaller operation than McDonald’s but the tremendous growth of its KFC business in China has made its shares immensely attractive to shareholders. Yum!’s stock has risen nearly 80% over the past two years. Sales increased last year to $12.6 billion and net revenue also was up to $1.3 billion. The market cap of Yum! Brands is $33 billion, and its stock shows no sign of flagging.

Burger King has picked a window for its new publicly traded status, and the decision could hardly happen at a move auspicious moment.

Douglas A. McIntyre