Wednesday, February 01, 2006

The whopper of a deal

That wooden-faced king in Burger King’s ads may soon be flashing an Alfred E. Neuman-scale smile. The chain announced today that it plans to file the paperwork for its initial stock offering within the next month or so. Amid the ongoing private-equity buy-o-rama, the industry is likely to witness one of its biggest-ever public-equity deals.

BK didn’t say how many shares it will issue, or the possible price of each. But some British media, reporting last week that the filing was imminent, speculated the IPO would generate about $2.5 billion. The chain’s current owners—Bain Capital, Texas Pacific, and Goldman Sachs—bought it three years ago for about $1.5 billion. A billion-dollar gain from three years of nurturing an asset? Not bad. Even a tech-sector braggart wouldn’t have promised returns like that.

Surprisingly, the IPO will mark Burger King’s first time as a pure play for stock pickers. It’s been part of a public company for much of its nearly 50 years, most recently as a holding of Diageo, Grand Metropolitan and Pillsbury. But never has it been the whole of a public concern.

It will be interesting to see how it handles such common public-company problems as the availability of financial-performance gauges to competitors, or having public franchisees (of which it already has several). And, of course, there’s the matter of who’ll run the company. CEO Greg Brenneman is a Texas Pacific principal, put into the corner office to restore the brand’s luster.

The IPO will tell what kind of job he did.

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