The home of the Whopper appears to be headed for the discount menu, where it could become a popular item, perhaps even for Warren E. Buffett.
The planned US$2.26 billion sale of Burger King was scuttled on Monday after its parent, Diageo Plc, acknowledged that the group of financiers that had agreed to acquire it had backed out of the deal.
While the group -- the Texas Pacific Group, Goldman Sachs & Co and Bain Capital -- is still talking with Diageo about a deal at a much lower price, about a half a dozen suitors that were rejected when Burger King was first put up for sale are considering new offers.
The most intriguing potential new suitor, Buffett's Berkshire Hathaway, was not part of the early bidding. But executives close to the sale process said on Monday that Buffett was taking a serious look at a possible offer for Burger King. Berkshire already owns Dairy Queen.
Among the list of other bargain hunters evaluating a possible new bid are the Triarc Cos., the owner of Arby's; the Blackstone Group; Madison Dearborn Partners; and Thomas H. Lee Partners, according to executives close to the sale process. Several of the potential suitors have already scheduled meetings with Diageo and its advisers to examine Burger King's latest financials.
Diageo, which owns brands including Johnnie Walker, Guinness, Smirnoff and Captain Morgan, is now expected to receive nothing close to the US$2.26 billion it expected when it announced the deal in July. Burger King has been troubled by soft sales this fall as it engaged in a fierce price war with McDonald's and Wendy's.
Under the sale agreement to the investor group, Burger King had to satisfy ``certain performance targets'' for the deal to be completed. Earlier this month, Diageo warned that the deal could unravel.
The investor group led by Texas Pacific now wants to pay only about US$1.5 billion for Burger King, the executives said. Diageo's own broker, Cazenove Group, expects the sale price to be US$1.5 billion.
Shares of Diageo plunged 4.1 percent on Monday after it announced the deal was in jeopardy, falling 29.5 pence, to 681 pence.
Analysts are worried that a deal will come at a significant discount to the price first envisioned and will probably not be completed by the end of the year.
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