Burger king owner acquires fried chicken chain Popeyes for $1.8 billion

Company - Mohit Shah - Feb 22,2017

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burgerking owner acquires fried chicken chain popeyes for 18 billion

Restaurant Brands international, the parent firm of Burger King and Tim Hortons, buys Popeyes, a fried chicken and seafood chain for $1.8 billion

Restaurant Brands International Inc., the Canadian multinational based in suburban Toronto, would pay $1.8 billion for Popeyes, a fried chicken and seafood, bringing this under the corporate umbrella same as Burger King and Tim Hortons. The transaction is expected to complete by April 2017.

The world’s third largest food chain operator signed a deal with Popeyes Louisiana Kitchen Inc., which gives shareholders of Popeyes Louisiana Kitchen Inc. (PLKI) $79 a share, nearly 20% higher from its closing price on the stock market last Friday. As an effect, share prices of PLKI immediately rose about 19 percent to just under $79.

Restaurant Brands international would pay for the Popeyes acquisition with financing from JP Morgan and Wells Fargo and cash in hand. Restaurant Brands international was formed in the year 2014, when 3G Capital-backed Burger King acquired donut and coffee chain Tim Hortons for $11bn.

Wall Street also seemed positive towards the deal. Shares of Restaurant Brands rose more than 7% and is expected to rise by more than 20% in 2017. The Revenue of Restaurant Brands also increased by 5 percent in the year 2016. Popeyes’s sales also rose 1.7 percent in the year 2016 with each location having $1.4 million annual revenue.

The Popeyes acquisition deal would provide Restaurant Brands International Inc. strong holding in fried chicken and seafood segment in both the North American and overseas markets. Restaurant Brands International Inc. has more than 20,000 global outlets and Popeyes has about 2,600 global outlets.

The Main competitors of Restaurant Brands, McDonald's Corp. has more than 36,800 outlets across the globe at the end of 2016. Yum Brands, the parent firm of Pizza Hut, KFC, and Taco Bell has more than 43,600 outlets.