Burger King Up For An IPO...

So Burger King is going for an IPO... from the web site:

Burger King Holdings Inc. said it plans to sell 25 million shares in the IPO at between $15 and $17 a share. The high end of that range would raise $425 million, before underwriting discounts and fees.

All sounds great, yes? But read on... further on in the press release:

Burger King said it would receive net proceeds of about $374 million with an IPO price of $16 per share, deducting underwriting discounts and other expenses. It expected to use almost all the money to pay off debt it took on for the cash payout to its current owners.

Burger King paid the owners a $367 million dividend in February. The owners and insiders also got a $30 million fee and $33 million for options and restricted stock -- bringing their total cash payout to $430 million.

So, let me get this right here - we're going public to acquire cash to pay off our owners?? They take on a debt to pay some cash-out to the new owners, and now we're raising money through an IPO to pay it back and relieve some of the debt burden on the company.

This is the company that has had 11 CEOs since 1989. That's not very long at the helm for any of them.

Then there was this in the press release:

The sale would represent about 19 percent of the company's overall shares, and a sale at $17 a share would value the entire company at about $2.25 billion. The biggest burger chain, McDonald's Corp., has a market value of about $43.2 billion, while No. 3 Wendy's International Inc. has one of about $7.1 billion, by comparison.

So the company is the number 2 burger joint in the world, but has a market cap (generally, its "value") of only 2.25 billion. The number 3 burger joint, Wendy's, has a market cap of a WHOPPING (no pun intended) 7.1 billion.

So if you read between the lines there, the number 3 joint has a market value of more than 3 TIMES that of the number 2 joint.

If I was investing, I'd be looking at Wendy's, even in the number 3 spot, with the better market cap, rather than Burger King, with the revolving door on the CEO's office, and the ownership group who allowed the company to take on a massive debt to get them paid at the closing table.

I'm just sayin....

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