Domino's parent is leading suitor for Burger King

July 18, 2002

NEW YORK -- An investment group including Bain Capital, parent company of Domino's Pizza, is one of two leading candidates for Burger King, the burger chain being sold by British beverage giant Diageo.

According to a report in the New York Post, Diago has narrowed its list to two potential buyers: a group including San Francisco firm Texas Pacific Group, Goldman Sachs Capital Partners and Boston-based Bain; and the team of Boston-based Thomas H. Lee Partners and Chicago-based Madison Dearborn Partners.

Diageo is asking the TPG-led team and the T.H. Lee-Madison Dearborn party to come back with revised offers, according to the Post, with a decision is expected in the next week or two.

According to the Post report, the TPG team is considered the leading contender because of its support of Burger King's National Franchisee Association. It also has a close relationship with John Dasburg, Burger King's chief executive. And Bain brings existing fast-food expertise with Domino's to the table.

However, the Madison Dearborn-T.H. Lee team could serve up some unexpected competition for TPG. Madison Dearborn owns a big stake in Carrols Corp., the largest Burger King franchisee.

The two finalists were among four bidding parties that submitted binding offers ranging between $2 billion and $2.3 billion on July 2, according to the Post. 

The other two suitors for the world's second-largest hamburger chain were a team of Hicks, Muse, Tate & Furst and Apax Partners, and Arby's owner Triarc Cos., run by financiers Nelson Peltz and Peter May.

Diageo, the world's biggest liquor company, put its Miami-based Burger King unit on the block in March in order to focus on its core drinks business.

Diageo hoped to fetch $2.3 billion or more for the fast-food chain. However, concerns about declining market share and the financial health of the chain's franchisees have lowered the price buyers are willing to pay.

Those concerns apparently caused a few other potential buyers -- including Apollo Advisors, Cypress Group and Blackstone Group -- to walk away from the table, according to the Post.

Bain paid about $1 billion in 1998 for a 93-percent share of Domino's, headquartered in Ann Arbor, Mich.

Topics: Public Companies

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