Texas Pacific Group, Bain Capital Partners and Goldman Sachs Capital Partners

Food & Drink Weekly, Dec 23, 2002

Diageo has finally sealed an agreement to sell its fast food chain Burger King and taken its final, significant step in realizing its dream of becoming a fully drinks-focused business. The company announced the sale of Burger King Corporation under revised terms to the buying group composed of Texas Pacific Group, Bain Capital Partners and Goldman Sachs Capital Partners.

The company said the purchase price is $1.5 billion. The sum is considerably less than an initial agreement between the two parties, which fell apart mid November. The purchase price will be settled in part by cash, by $86 million in assumed debt and the balance by means of subordinated debt with a principal amount of $212.5 million. Diageo said the cash portion of the purchase price reflects agreed adjustments for working capital and capital expenditure of Burger King and its subsidiaries. These variations are subject to the normal post-closing settlements, which are not expected to result in material changes to the cash received. Diageo is receiving $1.2 billion in cash. However Diageo is obliged to ensure that at completion Burger King has $65 million in cash.