Just after announcing the biggest menu overhaul in its history, Miami-based Burger King Worldwide Holdings Inc. has entered into an agreement with Justice Holdings Limited, a publicly listed UK investment vehicle, to go public. The move comes about 18 months after Burger King went private after its acquisition by 3G Capital.
Upon closing, the company will be incorporated in Delaware and will be renamed Burger King Worldwide Inc. It will be listed and traded on the New York Stock Exchange.
Under the terms of the agreement 3G Capital will remain the principal stockholder with 71 percent stake, and will receive approximately $1.4 billion in cash.
The Justice shareholders and its founders will own approximately 29 percent of the combined company. Justice's shares will be immediately suspended from trading on the London Stock Exchange.
"2011 was a pivotal year for the Burger King brand," said Bernardo Hees, chief executive officer, Burger King Worldwide. "Since 3G Capital's acquisition of the company, along with our franchisees, we have rolled out our four-pillar strategy in North America and expanded our international footprint in key growth markets. Burger King Worldwide's long-term strategy and its entire senior management team will remain unchanged. In partnership with our new public shareholders, we will continue to focus on creating profitable growth for our franchise system, while delivering best-in-class food and service for our guests."
Daniel Schwartz, CFO of Burger King, added that the timing is right to be publicly traded as the company positions itself for long-term growth domestically and internationally.
Justice was formed in February 2011. Its board voted unanimously in favor of entering the agreement.
"The Burger King transaction offers a number of the key features the board was looking for in a combination: strong cash flows, an experienced and successful management team, significant strategic growth opportunities and a company that would benefit from Justice's public ownership," said Lord Myners, the independent chairman of Justice's board of directors.
"The management team that 3G Capital has assembled to operate Burger King is extremely impressive and their progress in implementing cost control, and developing an international growth strategy in a relatively short period of time has been outstanding. We agree with management that the Burger King brand is still at an early stage of its true potential, and believe that over the next three to five years the U.S. turnaround and international growth franchise model can lead to significant margin expansion and free cash flow growth," added Justice co-founder Martin E. Franklin.
As part of the agreement, Franklin and Alan Parker, one of Justice's independent directors, will join the board of directors at closing, along with all of the existing Burger King Worldwide board members. Franklin is the founder and executive chairman of Jarden, a NYSE-listed, diversified consumer products company with revenue of approximately $6.7 billion. Parker was previously the chief executive of Whitbread PLC, the UK's largest hotel and restaurant company.
In the transaction, Justice's co-founders have agreed to reduce their founders' interests to 3 percent of the combined company's outstanding shares and have waived the right to receive any other additional equity interests originally contemplated by the Justice structure.
The transaction closing and listing is expected to occur in approximately 60 to 90 days.
"I have long admired 3G's track record as best-in-class operators in the beverage (Anheuser Busch), retail (Lojas Americanas), logistics, and railroad industries, and I have personally invested in 3G Capital's private equity funds," said William A. Ackman, co-founder of Justice. "When I learned that Burger King was interested in a possible transaction with Justice, I brought the opportunity to my Justice founding partners to consider. They liked what I saw, a 58-year-old global brand, and a simple, predictable, free cash flow growth franchise in the process of transformation into a pure brand royalty business. The results to date have been remarkable"
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