021122 Diageo Faces Cut-Price Burger King SaleNovember 19, 2002London - Britain's Diageo Plc said on Monday it was back to negotiating the sale of its Burger King hamburger chain after a private equity consortium led by Texas Pacific Group demanded a sharp cut in the price, to about $1.5 billion. Diageo secured a deal back in July to sell Burger King to the Texas Pacific-led (TPG) consortium for $2.26 billion, leaving Diageo to focus on its spirits, beer and wine interests, but poor trading at the fast- food operator forced TPG into a re-think. Earlier this month Diageo had warned investors it might have to revise the sale terms, prompting Diageo's broker Cazenove to cut its forecast for Burger King's selling price to $1.88 billion. But industry sources say Texas Pacific now only wants to pay $1.5 billion. Diageo shares were trading down 3.2% at 691 pence by 8:35 a.m. EST on Monday. The sources said Diageo was still keen to sell Burger King and reluctant to take an equity stake in the buying consortium, which also includes Bain Capital and Goldman Sachs Capital Partners. "Diageo was informed on November 15, 2002, by the buying group led by Texas Pacific Group that TPG and its partners would not be able to complete the acquisition of the Burger King Corporation on the terms previously agreed," Diageo said. "However, TPG and its partners expressed a desire to continue in discussions toward a transaction materially different as to terms and structure," the statement added. Diageo said talks were continuing with TPG while it also considered other options available to it.
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