Burger King holds buyout talks with 3G

The shares surged the most in more than four years.

The discussions may not lead to a transaction, said the person, who declined to be identified because negotiations are still in progress. The New York Times reported the talks with New York-based 3G yesterday.

Miami-based Burger King, second only to McDonald’s Corp. in the United States, had a market value of more than $2.2 billion as of yesterday.

A buyout might help Burger King repair relations with franchisees and allow the chain to differentiate itself from McDonald’s, said Mark Kalinowski of Janney Capital Markets in New York.

“We’ve seen quite a bit of private-equity interest in the restaurant space already this year,’’ said Kalinowski, who rates Burger King shares neutral. “At this point in Burger King’s history, it may be better off out of the public eye to solve some of the big challenges it faces.’’

Wendy’s/Arby’s Group Inc., the third-biggest US fast-food company, has already attracted interest this year, according to an investor, Trian Fund Management LP. The shareholder, Wendy’s/Arby’s largest, said in June that it had been approached about participating in a takeover of the Atlanta-based chain.

Burger King rose $2.41, or more than 14 percent, to $18.86. The shares surged as high as $19.19, the most since May 2006, when the company went public.

3G is the investment manager that in 2007 joined with London-based TCI Fund Management LLP to start a proxy contest against CSX Corp., the largest US railroad company. Alexandre Behring, the managing director at 3G, eventually won a seat on the CSX board.

3G has shown interest in fast-food chains in the past, disclosing last year that it owned about 4.2 million shares, or about 1 percent, of Wendy’s/Arby’s. 3G’s latest disclosure, of holdings as of June 30, did not show any Wendy’s/Arby’s shares.

The company also has ties to the Brazilian billionaire Jorge Paulo Lemann and his associates.

Lemann and three of his fellow directors at Anheuser-Busch InBev NV, the world’s largest brewer, are directors of 3G, according documents the beer company filed with regulators. Before joining 3G in 2005, Behring, also Brazilian, spent 10 years at GP Investments, the largest leveraged buyout firm in Latin America, which was founded by Lemann.

Burger King representatives did not respond to a call or an e-mail yesterday. Messages by e-mail, phone, and fax to 3G Capital were not immediately returned.

Burger King, led by chief executive John Chidsey, also operates in Latin America, Europe, and parts of Asia. Sales growth has slowed as more consumers opt to eat at home to cope with a deepening economic slump.

If Burger King were to fetch $19.50 a share, that would give the chain a valuation of about 6.3 times Kalinowski’s 2011 estimate for earnings before interest, taxes, depreciation, and amortization, he said. Some restaurant chains have fetched multiples of six to 10, he said.