BUYERS FOR BURGER KING SEEK TO REVISE SALE TERMS

Texas Pacific Group Says Chain Has Not Met Performance Targets

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CHICAGO (AdAge.com) -- Diageo, parent of Burger King corp., today said the group seeking to purchase the No. 2 burger chain wants to revise the terms of its $2.26 billion purchase agreement, and hinted that the deal could fall through.

"As with any such discussion this may result in no changes to the existing terms, changes to the existing terms" or an end to the transaction with the buying group, Diageo said in a statement.

Performance targets
In July, Texas Pacific Group,

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Bain Capital and Goldman Sachs Capital Partners offered to buy Burger King for $2.26 billion in cash, and made the deal and the sale price conditional on pre-set performance targets through the closing.

Diageo originally sought $2.8 billion for the chain, according to executives with knowledge of the deal.

While sales through the June 30 end of Diageo's fiscal year improved over the prior year, sales haven't sustained the growth in recent months despite a massive rebranding campaign and a new-products bonanza.

'Not as promising'
"Performance in Burger King since July 1 has not been as promising as the year up to that which ended in June," a spokesman for Diageo said. "As a result the buyer is renegotiating on the price."

According to Diageo, the consortium has pointed to the "conditions existing in Burger King's markets and the buying group's judgment of their potential effects under the agreement, including their potential effects under its financing," as the catalyst for the renegotiation.

Talks are expected to continue for several weeks.

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