Having it private equity’s way at Burger King …

September 2, 2010

What with the generic names that hedge funds and private-equity shops adopt these days, it’s not too surprising that the suitor of Burger King Holdings (BKC) was confused briefly with 3i, the U.K. private-equity shop that boasts _ì9.6 billion under management.

But no, it appears that Burger King’s buyer, at $4 billion, is 3G Capital, a New York-based investment firm with ties to high-profile Brazilian financiers, and one that, until now, has contented itself with buying stakes in CSX, Coca-Cola and the like.

As it turns out, that the Brazilian connection is fitting: There seems to be something of a mutual love-fest going on between the Home of the Whopper and the home of samba, capoeira and feijoada. From the 10-K that Burger King filed late last week:

“We believe that there are significant growth opportunities in South America. For example, we entered the Brazil market five years ago, and, as of June 30, 2010, had 93 restaurants in the country with those open for more than 12 months having average restaurant sales of $1.8 million on a trailing twelve-month basis. We currently expect to open approximately 500 restaurants in Latin America over the next five years. For the fiscal year, we opened 72 new restaurants in Latin America.”

Going from zero to 93 in five years isn’t too shabby, and the prospect of 500 more restaurants across Latin America in the next half-decade can’t have passed 3G by.

Still, this is BK’s second foray into private-equity’s hands in recent years: It was taken private in 2002 by a TPG Capital, Bain Capital and others, and then went public again in 2006. Now, a mere four years later, it’s going private again.

When BK last went public, it shelled out a $12.1 million in dividends and related payments to executives, directors and various funds controlled by the private-equity shops that had bought it several years earlier. It also paid those shops a $30 million “sponsor management termination fee,” according to its registration statements at the time. Goldman Sachs, a unit of which was one of the private-equity owners, also got $5 million more for helping to run the public offering. And we’re pretty sure we missed some other fees.

And Burger King’s stock? It was down 3% since it went public, the WSJ reported. All of which makes us wonder just how much value this game of ownership ping-pong really creates, and how much is being siphoned off in the process.

Image source: Burger King Brazil

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