Burger King parent company to sell shares to public for the first time

MIAMI — Burger King's parent company said Wednesday it plans to sell shares to the public for the first time in the fast-food chain's 52-year history, as it tries to more effectively compete with McDonald's and Wendy's.

"We believe the transparency and stability in ownership offered by being a public company will benefit our employees and franchisees for years to come," Chairman and CEO Greg Brenneman said in a statement.

Because the Securities and Exchange Commission bars companies from touting their prospects before initial public offerings, Miami-based Burger King Holdings Inc. declined further comment beyond saying its IPO filing will be made in late February or early March. Owen Blicksilver, a spokesman for the three private equity firms that own the chain, also declined comment.

Restaurant industry consultant Allan Hickok said customers could notice changes at Burger King restaurants if some of the proceeds of the IPO are used to buy and improve restaurants now owned by franchisees or to create new menu items. The funds could also be used to pay down debt or they could go straight to the pockets of the owners, but the company will likely use a combination of all these strategies, he said.

The ratings agency Standard & Poor's placed Burger King's B-plus credit rating under review for a possible upgrade after the announcement, based on its estimated the IPO would raise at least $600 million.

The "company has the opportunity to further improve operating performance over the next few years through menu changes, further strengthening of store execution and advertising, and expanding store hours," credit analyst Diane Shand said. But she added that progress could be "slow and uneven" because of intense competition.

Hickok said Burger King's timing was right, considering the success last week of McDonald's spin-off of Chipotle Mexican Grill Inc. Its shares doubled on their first day of trading. "You have to hit the public markets when they're receptive. Right now, I think you have a very favorable market environment," he said.

Burger King was long the second-largest hamburger chain behind No. 1 McDonald's, but it fell into a tie for No. 2 with Wendy's in 2004, according to research firm Technomic Inc.

Burger King doesn't report exact sales figures, but Technomic estimated its U.S. sales were $7.7 billion in 2004, down more than 2 percent from $7.9 billion in 2003. Figures for 2005 won't be available until the end of March.

Officials at McDonald's Corp. and Wendy's International Inc. didn't return messages seeking comment.