Burger King Holdings Is In Talks With Potential Buyers

(Reuters) – Burger King Holdings Inc (BKC.N: Quote, Profile, Research, Stock Buzz), the No. 2 U.S. hamburger chain, has been considering a possible sale and has held talks with potential buyers, a source familiar with the situation said on Wednesday.

The company, which has a market capitalization of about $2.3 billion, has been public since May 2006.

Famed for its flame-broiled Whopper, Burger King had previously been owned by private equity, which still hold a stake in the company. TPG, Bain Capital and Goldman Sachs (GS.N: Quote, Profile, Research, Stock Buzz) had owned it; after buying Burger King from British drinks company Diageo (DGE.L: Quote, Profile, Research, Stock Buzz) in 2002 for about $1.5 billion.

The Wall Street Journal previously reported the news, saying that Burger King has been in talks with private equity firms in recent weeks about a possible sale, and one interested firm was 3i Group Plc (III.L: Quote, Profile, Research, Stock Buzz).

The source who spoke to Reuters confirmed that one potentially interested party was 3i.

Burger King and 3i cound not immediately be reached for comment.

Burger King in August forecast weak demand for its new fiscal year amid a struggling economy and said it was unsure how costs for key ingredients like beef would impact the company.

The company did not issue an earnings forecast for fiscal 2011 but said on Tuesday that high U.S. unemployment and government austerity programs in several European countries would weigh on same-restaurant sales.

The company, which competes with McDonald’s Corp (MCD.N: Quote, Profile, Research, Stock Buzz), said it expected commodity costs in the United States to be flat in fiscal 2011, although prices of wheat and beef were uncertain.

Private equity firms have become increasingly active in the past few months, amid a spurt of M&A activity.

In August, Blackstone Group struck a deal to buy power company Dynegy Inc (DYN.N: Quote, Profile, Research, Stock Buzz) for $543 million, or $4.7 billion including debt.

Last month was the busiest August since 1999 in terms of the value of M&A deals struck. [ID:nN31265355]

(Additional reporting by Krishna N. Das in Bangalore; Editing by Mike Nesbit)