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VOL. 116 | NO. 234 | Thursday, December 5, 2002

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Diageo says burger deal about done

Diageo says burger deal about done
Britain's Diageo expects to sell its Burger King chain this month to a Texas Pacific consortium despite one of the main franchisees, AmeriKing, filing for Chapter 11 bankruptcy protection, industry sources said Wednesday.

Diageo's period of exclusive talks with the Texas Pacific group ends at the close of the year, and sources said Diageo does not expect the exclusivity period to be extended or other potential buyers to be invited to bid.

The news sent Diageo's shares traded in the Londons FTSE 100 more than 10 pence higher.

The London-based group agreed in July to a sale price of $2.26 billion, but last month, Texas Pacific cut the price it was willing to pay to $1.5 billion amid difficulties in financing the deal.

Sources told Reuters the Chapter 11 filing of AmeriKing did not come as a surprise given the current price war between fast food groups in the United States, especially the top two McDonald's Corp. and Burger King and it would not derail Diageo's sale of Burger King.

AmeriKing is the largest independent Burger King franchisee in the United States, with 361 restaurants located primarily in 12 Midwestern and Southern states.

Diageo still expects to sell Burger King in a clean deal, but the company might be forced to take an equity stake in the buying consortium, which includes Bain Capital and Goldman Sachs Capital Partners, to complete the sale.

The $2.26 billion price agreed upon in July was dependent on Burger King's trading performance until the deal was closed, but in late October, Diageo warned that price wars in the United States had led to a deterioration of Burger Kings business.

The dip in Burger King trading has caused problems for bankers at JP Morgan Chase and Salomon Smith Barney also part of the buying consortium in raising the necessary debt funding, sources said.

 

RECORD TOTALS DAY WEEK YEAR
PROPERTY SALES 73 147 18,012
MORTGAGES 89 184 20,749
FORECLOSURE NOTICES 34 42 2,735
BUILDING PERMITS 117 258 37,094
BANKRUPTCIES 55 114 11,540
BUSINESS LICENSES 42 59 5,907
UTILITY CONNECTIONS 21 48 6,878
MARRIAGE LICENSES 27 68 4,117