3G’s purchase of Burger King is the largest leveraged buyout of a food chain ever.
The recent buyout of Burger King has many wondering what the $4-billion deal means for Miami.
In September, investment firm 3G Capital, backed by Brazilian billionaire Jorge Paulo Lemann, bought the chain for $24 a share — a 46% premium over the stock’s recent trading price. More than 600 employees work at Burger King’s Miami headquarters. When the deal is complete, the fast-food chain will become the second big Miami-based public company in a year to go private. Last year, a private equity group bought BankUnited, the largest publicly traded bank headquartered in Florida, and took the bank private.
3G said in a letter to franchisees and employees after the announcement that it would keep the world’s No. 2 burger chain in Miami and invest in expansion. It appointed 40-year-old railroad CEO Bernardo Hees — who has no restaurant experience — as CEO. Craig Farlie, managing director of Fort Lauderdale investment bank Farlie Turner & Co., cautions that there could be “a lessening of community involvement or community funding” from the new owners. “Whereas public companies feel an obligation to be part of the local business community, maybe that isn’t shared as much by a private equity firm.”
Bob White, a mergers and acquisitions attorney with Gunster law firm, is less certain: “Some private equity firms are pretty good about that stuff, but others aren’t.”
What is clear is that the infusion of capital could give Burger King “some greater flexibility to … grow and expand,” says Frank Nero, CEO of Miami-Dade economic development partnership, the Beacon Council.
Indeed, attorney Robert Zarco, a franchise law expert who has filed many lawsuits against Burger King, points out that the premium 3G paid indicates that it expects to grow the company and has a long-term view. That would be a contrast with the past, Zarco says, when Burger King’s decisions often seemed to be governed by short-term results that would boost its stock by a point or two. He thinks 3G’s long-term outlook will lead to a healthier Burger King.