TIME:
I’ve been to this movie a few times.” Such was the response of one prominent Burger King franchisee,
when asked for his reaction to the $4 billion leveraged buyout that will take the country’s No. 2 hamburger chain private for the second time in less than 10 years. In 2002, investment firms TPG Capital, Bain Capital and Goldman Sachs Capital Partners bought Burger King from Diageo, the U.K.-based spiritsmaker, for $1.5 billion. The company tapped the public markets in 2006, but now 3G Capital Management, a New York investment firm backed by prominent Brazilian business officials, has agreed to acquire the chain for $24 a share, a 46% premium on Burger King’s Aug. 31 closing price.
To this skeptical franchisee, these ownership shuffles threaten to mask the more crucial issues facing the company: lousy sales (down 1.4% for the fiscal year ending on June 30), lousy profits (down 6.6% during that period) and lousy relations between the company and its franchisees (last November, local owners sued Burger King over its insistence that franchises sell double cheeseburgers for just $1). Read more.