BURGER KING ACQUISITION DEAL STALLS

Texas Pacific Group Demands Lower Price as Burger Chain Sales Falter

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CHICAGO (AdAge.com) -- Diageo, parent of Burger King Corp., today said its $2.26 billion deal to sell the struggling burger chain to a buying consortium is off, but that the two sides will continue to discuss alternative sale terms.

London-based Diageo issued a terse statement today saying it was told on Nov. 15 by the consortium, which is led by Texas Pacific Group, that Texas Pacific and its partners "would not be able to complete the acquisition ... on the terms previously agreed."

Considering other options
The statement went on to say that

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while the parties "expressed a desire to continue in discussions towards a transaction materially different as to terms and structure," Diageo also is "considering the other options available to it."

Burger King referred calls to Diageo, but said it is continuing the process it began last week. "We are looking at a lot of options and working with our franchisees on what those options might be and would be the most effective," a Burger King spokesman said.

Diageo announced Oct. 29 that the group comprising Texas Pacific Group, Bain Capital and Goldman Sachs Capital Partners wanted to renegotiate the sale terms struck July 25 after Burger King didn't satisfy performance targets set during the closing period.

'Senseless price war'
The announcement sent Burger King marketing management into an urgent campaign to blame its woes on a "senseless price war" with burger rival McDonald's Corp. Burger King launched in late August and early September a 99-cent BK Value Menu modeled after the 13-year-old under-a-dollar menu used by Wendy's International. McDonald's fired back with its own Dollar Menu last month.

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