Wednesday, September 1, 2010

Lucky Timing with Burger King (BKC) Short Cover

Extremely lucky timing with the cover of Burger King (BKC) short cover yesterday, as reports surfaced overnight of one group of private equity guys wanting to buy from the old guard of private equity guys.  This is pretty typical of the new American economy - shuffle pieces of paper (or companies) - the old buyers make money, the new buyers create a purchase structure so they cannot lose even if the company goes down the toilet, and the investment banks advising make fees.  [BusinessWeek 2006: Burger King - Where's the Beef?]  No need to improve the company - just keep doing "the shuffle" and layer on fees for the corporate raiders and associated parties.  Everyone wins... except for the target company and its employees, in most cases!  If Burger King were being run anywhere near as well as McDonald's there would be no stinky stock price nor opportunity to do "the shuffle".

The stock is up some 15% in premarket.

Via Reuters:

Burger King Holdings Inc, the No. 2 U.S. hamburger chain, has been considering a possible sale and has held talks with potential buyers, a source familiar with the situation said on Wednesday.

The company, which has a market capitalization of about $2.3 billion, has been public since May 2006.

Famed for its flame-broiled Whopper, Burger King had previously been owned by private equity, which still hold a stake in the company. TPG, Bain Capital and Goldman Sachs (GS.N) had owned it; after buying Burger King from British drinks company Diageo (DGE.L) in 2002 for about $1.5 billion.

The Wall Street Journal previously reported the news, saying that Burger King has been in talks with private equity firms in recent weeks about a possible sale, and one interested firm was 3i Group Plc (III.L).

No position

Disclaimer: The opinions listed on this blog are for educational purpose only. You should do your own research before making any decisions.
This blog, its affiliates, partners or authors are not responsible or liable for any misstatements and/or losses you might sustain from the content provided.

Copyright @2012