Popeyes sold to Burger King owner for $2.55b

Popeyes' same-store sales gained 1.8 per cent as US eateries endured a slump in the third quarter.
Popeyes' same-store sales gained 1.8 per cent as US eateries endured a slump in the third quarter.PHOTO: BLOOMBERG

NEW YORK • Restaurant Brands International agreed to buy Popeyes Louisiana Kitchen for about US$1.8 billion (S$2.55 billion), adding a fried-chicken chain to its line-up of burgers and doughnuts.

The cash offer of US$79 a share represents a 19 per cent premium to Popeyes' closing price on Friday.

The transaction is expected to close by early April, the companies said. The acquisition would be the first major deal for Restaurant Brands, which was formed in the 2014 merger of Burger King and Tim Hortons.

The company's managers have long said they would consider taking over other brands, where they could boost profit by cutting costs and selling locations to franchisees.

Restaurant Brands, backed by Brazilian private-equity firm 3G Capital, also may look to expand the chain abroad. Restaurant Brands' shares rose as much as 7.3 per cent to US$57.84 in New York on Tuesday. The stock was already up 13 per cent this year until Friday. Popeyes surged as much as 19 per cent to US$78.85.

Popeyes began 45 years ago as a fried chicken restaurant in a New Orleans suburb. It has expanded to more than 2,600 restaurants in the US and 25 other countries.

Chief executive Cheryl Bachelder has improved relationships with franchisees, sped up service times and played up the brand's New Orleans heritage with foods such as Magnolia Blossom Chicken. The chain will continue to be independently managed in the US, Restaurants Brands said.

Popeyes has done "pretty well since they've rebranded", said Mr Darren Tristano, president at industry researcher Technomic. "They've been very effective with advertising... and innovative."

The chain's same-store sales gained 1.8 per cent in the third quarter as most US restaurants endured a slump. There are no plans for layoffs now, and Popeyes will continue to be based in Atlanta, Restaurant Brands chief executive Daniel Schwartz said.

For Restaurant Brands, the buying may not be over. The company may look to add another brand to its portfolio in the next 12 months, Mr Tristano said.

BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on February 23, 2017, with the headline 'Popeyes sold to Burger King owner for $2.55b'. Print Edition | Subscribe