Restaurant Brands Soars 65% Following $5.05 Takeover Bid

Shares of Restaurant Brands experienced a significant surge of 65.2% after the fast food company received a takeover bid from Finaccess Restauracion, a Mexican firm. The proposal, which offers $5.05 per share in cash for all outstanding ordinary shares, represents a remarkable 70.6% premium over the company’s closing price of $2.96 on the previous trading day. As a result, Restaurant Brands shares closed at $4.89.

Finaccess, which already holds approximately 75% of Restaurant Brands, aims to acquire the remaining shares as the fast-food industry continues to navigate challenging economic conditions. The company holds franchise rights for popular brands including Pizza Hut, Carl’s Jr, Taco Bell, and KFC in regions such as New Zealand, Australia, and parts of the United States.

In its latest financial report, Restaurant Brands posted a half-year profit after tax of $11.9 million, reflecting a decline of 5.6% compared to the same period last year. The decrease in profit is attributed to the ongoing cost of living crisis, which has adversely affected consumer spending. Chairperson José Parés remarked on the company’s ability to “navigate an extended period of cost pressure and economic uncertainty,” highlighting the impact of prolonged inflation and shifting consumer behavior.

Restaurant Brands operates a total of 522 stores, with 380 managed directly by the company and 142 franchised. Its presence spans across 156 stores in New Zealand, 83 in Australia, 70 in Hawaii, and 71 in California.

Greg Smith, an analyst at Generate Investment Management, noted that the offer from Finaccess is approximately $10 lower than the peak share price reached during the COVID-19 pandemic but reflects the challenging environment for the quick service restaurant industry. Rising input costs and a constrained ability to pass on those costs to consumers have hindered share performance.

The fast food sector has seen mixed results in recent months. BurgerFuel Group reported a 22.6% decline in after-tax profit, dropping to $1.02 million from $1.32 million, as it faced stagnant sales and a decrease in customer numbers due to youth emigration. Research conducted by Coca-Cola, one of BurgerFuel’s largest suppliers, indicated that New Zealanders are now purchasing fast food or takeaways an average of 2.4 times per month, the lowest rate in seven years.

Despite these challenges, Smith emphasized that the attractive premium offered by Finaccess would likely compel Restaurant Brands’ management to recommend the bid to shareholders. As the fast food landscape evolves amid economic pressures, the outcome of this takeover bid will be closely monitored by investors and market analysts alike.