UK drinks firm Diageo has finally completed the sale of its Burger King fast food chain to a consortium of US private equity firms comprising Texas Pacific Group, Bain Capital and Goldman Sachs Capital Partners.
The sale price of $2.26bn is considerably lower than Diageo’s original target last year when it valued the firm at up to $4bn. The price is also slightly below the $2.3bn that analysts had predicted. A portion of the purchase price is also dependent upon Burger King Corporation satisfying certain performance targets in its financial year ended 30 June 2002.
The winning group's sole serious rival was a group of private equity firms led by Blackstone, which included Thomas H. Lee and Madison Dearborn. However the consortium withdrew from the Greenhill & Co-led auction following confirmation of the higher offer from TexPac.
Texas Pacific Group, Bain Capital and Goldman Sachs Capital Partners are among the largest partnerships in the US private equity arena, having between them invested in excess of $35bn. Texas Pacific’s Jonathan Coslet led the deal on behalf of the consortium.
For the year ended 30 June 2001, Burger King's operating profit, before exceptional items and goodwill amortisation, was $257m. At 31 December 2001 its net assets stood at $2.2bn, slightly below the offer price. The Florida-based company was founded in 1954 and operates in 55 countries throughout the world. It generated $11.2bn in sales in over 11,000 worldwide restaurants in the year ended 30 June 2001.