At long last Burger King is hosting an IPO, scheduled to take place the end of this month or early March. Occurring on the heels of the successful Chipotle Mexican Grill offering, Burger King clearly hopes to take advantage of investors’ recent “appetite” for restaurant stocks. Indeed, the timing of the offering appears to be a positive sign about the strength of the IPO market, at least for some industries. Burger King also appears to hope that such an offering will finally move the company past its position as the second largest hamburger chain. It will be interesting to see if the offering can achieve that goal.
In addition to signaling the strength of the IPO market, the offering has the potential to raise a lot of money and benefit investors. Some analysts predict that the offering will raise more than $300 million, and thus be one of the biggest restaurant offerings in recent history. The offering also will finally provide greater liquidity as well as transparency for its investors. Hence, the offering likely will prove beneficial to investors even if it fails to meet analysts' expectations about price. Yet the fact that Burger King has been in the business for more than 50 years leaves me to question whether the offering will have any impact on Burger King’s ultimate goal of being number one. Indeed, given its 50-year history, I have to wonder, what about this offering will finally convince people that the Whopper is better than the Big Mac?
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1. Posted by Stanle Polansky on February 22, 2006 @ 13:08 | Permalink
I sure would like to know what brokers re bringing them forward. My guess is Morgan Stanley. they were involved in the Mcdonald's spinoff.
2. Posted by Dale Wettlaufer on February 22, 2006 @ 13:35 | Permalink
JP Morgan is the lead manager with Citi, Goldman, and Morgan Stanley in the deal.
My guess is this will not be as hot a deal. Chipotle had tons of business momentum behind it and all the promise in the world while the Burger King IPO all about the private equity guys extracting some cash on an asset they weedled out of Diageo pretty successfully. Burger King did comparable store sales growth of 1.3% for the six months ended December, 2005 (which doesn't keep up with inflation, mix and autonomous pricing moves held constant) while Chipotle did comps of 10.2% for 2005. That's all a lot of market participants are going to want to know.
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