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

Burger King India said it has entered into discussions regarding acquisition of a controlling stake in PT Sari Burger Indonesia, which manages and operates Burger King brand in Indonesia.

Burger King India said that it believes PT Sari Burger Indonesia (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 it can be the right partner to drive the Burger King brand in Indonesia though its next phase of growth.

The company has entered into a non-binding understanding with F&B Asia Venture (Singapore). 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 BK Indonesia.

Burger King India, in response to an invitation for a non-binding offer from F&B Asia, submitted a non-binding indicative proposal 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 $40 million), at a pre money enterprise value of BK Indonesia at $183 million on a cash free and debt free basis. The proposed transaction is subject to finalization of the structure, terms of acquisition, approval of the board and shareholders of the company.

Burger King India further announced that the proposal, on a non-binding basis, has been accepted by F&B Asia on Friday (27 August). Accordingly, the parties are subject to an exclusivity period of 90 days to explore and negotiate 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 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.

Burger King India set shop in India in November 2014 and has been among the fastest expanding quick service restaurant chains in the country. It is promoted by QSR Asia. The company is the national master franchisee of Burger King in India, with exclusive right and license to develop, establish, operate and franchise Burger King restaurants in India.

Burger King India reported net loss of Rs 44.35 crore in Q1 FY22, lower than net loss of Rs 80.45 crore in Q1 FY21.

Shares of Burger King India rose 0.71% at Rs 171.40 on Friday.

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