Diageo on liquids only diet after $2.3bn Burger King sale
Friday 26 July 2002
Diageo sealed its transformation into a focused drinks group yesterday, with the $2.26bn (£1.4bn) sale of Burger King to a consortium of US venture capitalists led by Texas Pacific.
The drinks giant, which was formed five years ago when Grand Metropolitan merged with Guinness, said it planned to return a "substantial" portion of the sale proceeds to its investors, by buying back its shares. It will invest the remainder in developing new products from its existing Johnnie Walker scotch-to-Smirnoff vodka drinks portfolio.
John Dasburg, Burger King's chairman and chief executive, will stay on to run the fast-food chain, along with his management team. Since Mr Dasburg was recruited last year to turn around the troubled business, sales have recovered and relations with its franchisees have improved. "Working closely with our franchisee partners, we have made good progress in moving this brand forward," Mr Dasburg, the former chief executive of Northwest Airlines, said.
Diageo had planned to float Burger King on the New York Stock Exchange, but shelved the plan in the face of falling stock markets and burger sales.
The drinks group took a £50m hit for restructuring the business last July, since when a management-backed buyout has looked the most likely exit route. It started an auction process for Burger King in March. The San Francisco-based Texas Pacific, which teamed up with Bain Capital and Goldman Sachs Capital Partners, beat off competition from 10 other parties. Diageo's shares rose 9 per cent to 740p on confirmation of the deal.
About 5 per cent of the sale price depends on Burger King meeting performance targets in the year to 30 June 2002, while the tax cost on the deal will be £175m. Financial results for the "home of the Whopper" will be released on 5 September, with Diageo's full-year results.
Analysts said Burger King, which has 11,400 outlets in 57 countries, had fetched a fair price, given market turbulence.
- 1 President of Argentina adopts Jewish godson to 'stop him turning into a werewolf'
- 2 Doctors remove 80 teeth from boy's jaw
- 3 The 'Black Museum': After 150 years, public set to see exhibits from police’s grisly crime museum
- 5 Sir Winston Churchill’s family begged him not to convert to Islam, letter reveals
President of Argentina adopts Jewish godson to 'stop him turning into a werewolf'
The 'Black Museum': After 150 years, public set to see exhibits from police’s grisly crime museum
Downfall of Dustin 'Screech' Diamond, the 'Saved By The Bell' star charged with bar stabbing
Syrian teenager Usaid Barho reveals how he escaped from Isis using a suicide vest
Sir Winston Churchill’s family begged him not to convert to Islam, letter reveals
Millions of Britons struggling to feed themselves and facing malnourishment
British actor Idris Elba cannot star as James Bond because he is black, says shock jock Rush Limbaugh
Ukip member gets into Christmas spirit with Union Flag plea to Santa 'for our country back'
Germany anti-Islam protests: 17,000 march on Dresden against 'Islamification of the West'
Nigel Farage: Ukip leader named 'Briton of the year' by The Times
Immigrants make UK racist, says Ukip councillor Trevor Shonk
iJobs Money & Business
Not specified: Selby Jennings: VP/SVP Credit Quant Top tier investment bank i...
Not specified: Selby Jennings: Quantitative Research | Global Equity | New Yor...
Not specified: Selby Jennings: SVP Model Validation This top tiered investment...
Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...