Burp: Burger King sold for $4 billion !!

Burger King announced that 3G Capital will acquire the stock of the Company for $24.00 per share, or $4.0 billion, including the assumption of the Company’s outstanding debt. TPG Capital, Goldman Sachs Capital Partners and Bain Capital Investors, which own approximately 31% of Burger Kings's outstanding shares have agreed to sell their holdings to 3G Capital.

3G is looking at Burger King as a turnaround opportunity. Burger King has been struggling lately. In a communication to investors it anticipated weak demand for its products due to high unemployment in the United States and economic weakness in Europe. It also said that cost of raw materials like wheat and beef could affect its results.

In fact Burger is going private just 4 years after returning to the capital markets. The company was taken private in 2002 by a trio of buyout firms - TPG Capital, Bain Capital and Goldman Sachs Capital Partners. In the last 4 years the company has underperformed its bigger rival, McDonald's. The share price (till before the announcement of the deal) is down 6% from its IPO price 4 years ago while McDonald's has more than doubled in that time.

For a time-line of Burger King's Corporate History visit the following link:

http://www.bk.com/en/us/company-info/index.html

Is Reliance Bidding For LyondellBasell ?

Is Reliance Industries Ltd (RIL) in talks to buy bankrupt LyondellBasell, one of the world's largest polymers, petrochemicals and fuels companies? The buzz on Dalal Street is that RIL is looking to is looking at acquiring some or all of the assets of the company.

On December 20, 2007, Basell, owned by New York-based investor Len Blavatnik's Access Industries, acquired Lyondell Chemical Company through an all-cash leveraged buyout at $48 per share. This deal left the combined entity, LyondellBasell saddled with a heavy debt load.

LyondellBasell filed for Chapter 11 Bankruptcy under the US Bankruptcy Code on January 6 this year because of a short-term liquidity crisis. The company had USD 27 billion in assets and USD 19 billion in debt when it filed for bankruptcy. The company also had annual revenues of USD 50.7 billion in 2008.

Adding further fuel to the fire, on Tursday 17th September, RIL sold 1.5 crore treasury shares at an average price of Rs 2,125/share and raised Rs3,188 crore (USD 655 million). The treasury shares were created in May 2002 after the merger of Reliance Industries with the Reliance Petroleum (the old entity). The Petroleum Trust which was created to house the treasury shares still owns 9 crore worth 18000 crore (assuming RIL trades at Rs 2000/share). This money could be used to fund the LyondellBasell deal.

As per news reports RIL declined to comment on the rumored deal, but said "the company is committed to growth and creating value for long-term investors. Its sale of treasury shares on Thursday indicates the management intends to make large investments".

LyondellBasell’s reorganization plan will be provided to the US bankruptcy court on October 14, so that is when the details will be made public. So if the buzz on the street is right, the information should be in public domain before October 14.

Read about LyondellBasell’s bankruptcy here