Tim Hor­tons par­ent com­pany to buy Popeyes restau­rant chain

The Hamilton Spectator - - BUSINESS - ALEKSANDRA SAGAN

TORONTO — The par­ent com­pany of Tim Hor­tons and Burger King is mak­ing a move to add fried chicken to its reper­toire with an offer to buy Popeyes in a friendly deal.

Restau­rant Brands In­ter­na­tional said Tues­day it will pay US$1.8 bil­lion for the Louisiana-style fried chicken chain. That trans­lates to US$79 per share in Popeyes Louisiana Kitchen Inc., which trades on the Nas­daq com­pos­ite.

“We’re re­ally ex­cited we’re adding an­other iconic and suc­cess­ful brand, one that has re­ally rich Louisiana her­itage that’s go­ing to res­onate with guests all around the world,” RBI chief ex­ec­u­tive of­fi­cer Daniel Schwartz said in an in­ter­view.

The deal doesn’t come as a sur­prise to an­a­lysts, said Will Slabaugh, man­ag­ing di­rec­tor at Arkansas-based Stephens Inc.

“I think it was al­ways hinted at that there might be more brands in the fu­ture,” he said, ref­er­enc­ing RBI’s suc­cess­ful 2014 ac­qui­si­tion of Tim Hor­tons that led an­a­lysts to be­lieve RBI could have a strong plat­form to roll in other quick-ser­vice restau­rants.

How­ever, there aren’t many chains that fit RBI’s cri­te­ria for ac­qui­si­tion. Slabaugh said the com­pany is likely look­ing for chains that are at­trac­tive to con­sumers around the world — not just Amer­i­cans.

Schwartz said that RBI plans to ac­cel­er­ate Popeyes’ growth in the U.S. and be­yond. The com­pany cur­rently has more than 2,600 restau­rants, mostly in Amer­ica, with 621 in­ter­na­tional lo­ca­tions.

“There is no rea­son that this brand can’t be mul­ti­ple times its size in many, many years from now,” said Schwartz, adding that Popeyes is cur­rently grow­ing at a sim­i­lar pace to Burger King when RBI first ac­quired that fast-food chain.

In 2010, Burger King was adding 173 net new restau­rants glob­ally per an­num. Last year, that num­ber grew to 735.

Schwartz cred­its that to RBI’s master fran­chisee joint ven­ture growth model, which gives one or a group of fran­chisees the rights to ex­pand the chain in a spe­cific area. He said RBI would use the same model to grow Popeyes, whose foot­print he says is un­der-pen­e­trated com­pared to com­peti­tors like KFC.

Restau­rant Brands makes money from fees it charges fran­chisees who op­er­ate Burger King and Tim Hor­tons restau­rants.

Popeyes shares soared on the news of the deal, clos­ing at US$78.73, a jump of US$12.61 or about 19 per cent from Fri­day. RBI stock also gained value, clos­ing at $75.65 on the Toronto Stock Ex­change, up $4.98 or about seven per cent.

The trans­ac­tion will de­liver im­me­di­ate value to Popeyes share­hold­ers, CEO Ch­eryl Bachelder said in a news re­lease jointly is­sued with RBI.

The pro­posed takeover re­quires var­i­ous ap­provals and sup­port from more than half of Popeyes’ share­hold­ers, but RBI ex­pects the deal to close by early April. Popeyes’ man­age­ment is ex­pected to con­tinue to op­er­ate the U.S. busi­ness.

RBI has its head­quar­ters in Oakville, west of Toronto, with more than 20,000 restau­rants in more than 100 coun­tries and U.S. ter­ri­to­ries.

CHRIS YOUNG, THE CANA­DIAN PRESS

A Popeyes fast food out­let in Toronto. The par­ent com­pany of Tim Hor­tons and Burger King will pay US$1.8 bil­lion cash to buy the chain.

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