Burger King India Limited in talks to acquire controlling stake in Burger King Indonesia

Burger King India Limited has recently entered into discussions regarding acquisition of a controlling stake in PT Sari Burger Indonesia ("BK Indonesia"), which manages and operates Burger King brand in Indonesia.

The Company believes that BK Indonesia can be a good fit given the Company's experience in managing and operating the "Burger King" brand in India. The Company realises the high growth potential in the Indonesian market and believes that the Company can be the right partner to drive the Burger King brand in Indonesia though its next phase of growth.

In this context, the Company has entered into a non-binding understanding with F&B Asia Venture (Singapore) Pte. Ltd ("F&B Asia") (the "Proposed Transaction"). F&B Asia through its wholly owned subsidiary currently holds an indirect equity interest of 65.79% in BK Indonesia. F&B Asia is a member of the 'promoter and promoter group' of the Company.

The Company, in response to an invitation for a non-binding offer from F&B Asia, had submitted a non-binding indicative proposal to F&B Asia, for acquisition of controlling stake by way of a combination of primary and secondary transaction (i.e. up to 85% in BK Indonesia directly or indirectly by way of a secondary purchase and a further primary investment of up to USD 40 million), at a premoney enterprise value of BK Indonesia at USD 183 million on a cash free and debt free basis. The Proposed Transaction is subject to, inter alia, finalization of the structure, terms of acquisition, approval of the board and shareholders of the Company, satisfactory completion of a due diligence exercise, receipt of necessary regulatory, lender, third party approvals and other approvals as may be necessary, negotiation of definitive agreements between the parties, etc.

The proposal, on a non-binding basis, has been accepted by F&B Asia earlier today. Accordingly, the parties are subject to an exclusivity period of 90 days to explore and negotiate the Proposed Transaction. Neither the non-binding offer nor its acceptance is intended to nor shall it create a legally binding contractual relationship and the Company retains the right to withdraw from the negotiations in relation to the Proposed Transaction.

In terms of next steps, the Company and F&B Asia shall take the process forward including undertaking a due diligence exercise and commencing negotiations on the terms of the Proposed Transaction (including acquisition structure, tax impact assessment, consideration/ adjustments, relevant corporate, franchisor, regulatory and other approvals, relevant conditions, covenants and definitive agreements), appointing relevant advisors and intermediaries (including financial advisors, legal advisors, tax advisors and other advisors/ intermediaries as may be required). The Company will also consider and negotiate various options available for funding the Proposed Transaction, which may include raising capital by issuing fresh equity shares.

Shares of Burger King India Limited was last trading in BSE at Rs. 171.4 as compared to the previous close of Rs. 170.2. The total number of shares traded during the day was 245204 in over 3962 trades.

The stock hit an intraday high of Rs. 173.6 and intraday low of 165. The net turnover during the day was Rs. 41830552.

Source : Equity Bulls

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