The bids submitted yesterday in the tender to acquire the Burger King franchise are much lower than expected. While bids of approximately $9 million were mentioned in the months preceding the tender, “Globes” has learned that the three bids in the tender ranged from $1 million to $3 million. The joint MacDonald’s (NYSE: MCD)-Burger Ranch bid is much higher.
MacDonald’s and Burger Ranch bid $6 million before the official tender, without due diligence, but the bid expired on March 10. The two chains are operating simultaneously on two fronts. They have submitted a formal bid in the tender, and are also making strenuous efforts to sign new leases with the lessors of attractive Burger King outlets, to order to reserve them for themselves, and discourage potential buyers.
It should be kept in mind that despite the wide gap between the MacDonald’s-Burger Ranch bid and the other bids, a pricing procedure is still scheduled to take place among the bidders. Furthermore, Antitrust Authority director general Dror Strum has already notified the parties involved that even in the event of a wide gap between the bids, he would not permit Burger King to be sold to bidders seeking to eliminate the brand name, if a third party capable of buying the chain is found, albeit at a much lower price.
Cornerstone Management and Consulting, the Burger King franchise holder for Hungary, yesterday bid $1.5 million for the Israeli franchise, plus $200,000 for the employees fund. After conducting due diligence, the company concluded it would have to invest another $3 million in rebuilding the chain, in view of the loss of key outlets.
Published by Globes [online] - www.globes.co.il - on April 8, 2003