A £900 million London investment vehicle chaired by Lord Myners with the backing of famed Wall Street activist investor Bill Ackman has struck a deal to buy a chunk of Burger King from its private equity owners and float it back on the New York Stock Exchange.
Alan Parker, the man who turned around the Whitbread group by focusing it on Costa Coffee and budget hotels, will join the board as part of the complex deal which will trigger big fees for an army of City advisers led by Barclays Capital.
It is the latest dramatic corporate move by Ackman who, through his Pershing investment group, has previously agitated for change at Wendy’s and McDonald’s after taking sizeable stakes.
He co-founded Justice, a London Stock Exchange-listed cash shell, last February and raised £900 million with the aim of delivering a transaction of up to $10 billion.
Justice will buy the Burger King stake from 3G Capital and will then delist from London and float the chain’s shares again in New York. Ackman said Burger King’s underlying profits this year were expected to be “nearly double” those when it was taken private by 3G Capital in October 2010.
Justice directors also include Martin Franklin, the executive chairman of Jarden, which makes consumer products from baby dummies to DIY equipment.
3G Capital, which bought the fast food chain in $4bn deal in 2010, will retain a 71% shareholding in Burger King Worldwide.
When it refloats this year, it is expected to be valued at about $8 billion.
Franklin said Burger King was still at “an early stage of its true potential”.
He cited a US turnaround and expansion overseas through franchising over the next three to five years which could lead to “significant margin expansion and free cash flow growth”.
Since 3G took control of Burger King, the chain has increased its underlying profits, before capital expenditure, from $320 million in 2010 to $503 million last year.
