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The Globe and Mail

Burger King sells $1.4-billion stake to Ackman

A customer orders food at a Burger King restaurant in Miami.

Luis M. Alvarez/Luis M. Alvarez/AP

Burger King, the U.S. restaurant chain, will sell a 29-per-cent stake to Justice Holdings, a UK investment vehicle, which plans to take the company public again.

Justice, which was founded by the activist investor Bill Ackman, will pay $1.4-billion in cash to 3G Capital, which took Burger King private in 2010 and will remain the majority shareholder. After the deal closes, Burger King will return to the New York Stock Exchange.

Daniel Schwartz, chief financial officer of Burger King, said that being publicly traded in the US would help the company forge ahead with its international expansion plans and regain its footing domestically.

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Burger King recently lost its status as second-place behind McDonald's in the hamburger chain wars, falling behind Wendy's to become third largest hamburger chain by market share. The company has changed its advertising strategy and this week unveiled an array of new menu items that emulated offerings such as salads, coffees and smoothies that have been successful for McDonald's.

The deal is expected to close within three months and Justice will then stop trading on the London Stock Exchange.

Mr. Ackman, who runs the hedge fund Pershing Square, formed Justice last year with Martin Franklin, chairman of consumer products group Jarden, and Nicolas Berggruen, a French billionaire who has worked with Mr. Franklin on other acquisition vehicles.

The group said at the time that it would look for a minority stake in a well-established target, most likely in the developed world.

3G Capital acquired Burger King in 2010 in a $4-billion deal and assumed $750-million in debt.

Backed by the Brazilian billionaires Jorge Paulo Lemann, Marcel Telles and Carlos Sicupira, the group has looked to grow Burger King in Latin America and Brazil. Last year 3G Capital announced plans to open 900 restaurants in Brazil by 2016.

"When I learnt that Burger King was interested in a possible transaction with Justice, I brought the opportunity to my Justice founding partners to consider," Mr. Ackman said. "They liked what I saw, a 58-year-old global brand, and a simple, predictable, free cash flow growth franchise in the process of transformation into a pure brand royalty business."

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Last year Burger King's net income was $29.4m and its revenues fell 3.8 per cent to $580.6m from 2010.

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