Burger King Raises $425 Million in IPO

Burger King Holdings Inc. raised $425 million in an initial public offering Wednesday as the company began a turnaround. The sale valued Burger King at about $2.26 billion.

The Miami-based chain sold 25 million shares at $17 each, bankers involved in the sale said. The stock will trade on the New York Stock Exchange starting today under the symbol BKC.

Burger King offered shares to the public after eight straight quarters of gains in U.S. comparable-store sales. The IPO follows the departure in April of Chief Executive Greg Brenneman, the second CEO in four years, after he reversed market share losses to McDonald’s Corp. and posted a profit of $47 million in the year ended June 30.

“Burger King is on some levels a great story because it has some of the best brand equity in America with the Whopper,” said Allan Hickok, a restaurant industry consultant at Restaurant and Retail Strategies in Minneapolis. “The flip side is they have had issues with management, new product development and marketing.”

Private equity firms Texas Pacific Group, Bain Capital and Goldman Sachs Capital Partners purchased Burger King from Diageo for $1.5 billion in December 2002. The three firms own about 77% of the shares outstanding after the IPO. Bankers managing the offering may sell an additional 3.75 million shares to meet demand, which will reduce the ownership stake to 74%.

Burger King on Feb. 21 paid a dividend of $367 million to the three buyout firms, according to a regulatory filing. The company also gave about $33 million to senior management in options and restricted-stock units. Proceeds from the IPO will be used to repay a loan taken to make the payments.

The company in April reported a net loss of $12 million for the three months ended March 31, compared with a profit of $1 million a year earlier. Sales rose 5.8% to $495 million.

The chain is forecasting annual revenue growth of 6% to 7% for the next five years.