J.P. Morgan and Salomon Smith Barney reportedly are arranging $800 million in bank debt and $680 million in bonds to back the acquisition of Burger King by a consortium of private-equity firms. Texas Pacific Group, Bain Capital and Goldman Sachs Capital Partners are purchasing the giant fast-food franchise from Diageo for $2.26 billion, though Goldman Sachs at this point is not confirmed as a lead on the debt financing, according to bankers. The sponsor firms are believed to be putting in $780 million of equity to fund the deal, but officials at the firms either could not be reached or declined to comment on the financing arrangements.
Burger King has EBITDA of approximately $310 million, so the bank deal would be levered at 2.6 times senior. Total leverage would be closer to 4.75 times. The private equity firms are planning to re-invigorate the chain, according to a banker. The No. 2 burger chain after McDonald's has seen its operating profit fall and market share slide.