In Burger King Deal, Ackman Gnaws on Old Bone
The deal involving the third-largest burger chain grabbed headlines because it will prompt an initial public offering of Burger King shares on the New York Stock Exchange, coming full circle from the formerly public company's $4 billion leveraged buyout by 3G Capital in 2010.
But Burger King isn't the only one up to its old tricks. Pershing Square's stake in Justice Holdings represented a rare buyout investment push, but the fund's minority investment in Burger King also signals that you can't teach an old dog new tricks when it comes to identifying value investments.
|Ackman's appetite hasn't changed with Burger King deal.|
Ackman's stake may turn out to be a canny investment, holding firm to the hedge fund manager's investing discipline and his focus on significant, but not controlling, stakes in consumer-oriented companies.
At the Value Investing Congress in October, Ackman indicated that Justice Holdings would look to buy a company and then sell shares in an IPO. "Every private equity firm should be banging down our door," Ackman said when speaking about possible deals the fund could make.
In a subsequent conference call about the investment on Wednesday, Ackman said that after having been familiar with 3G's top executives for years, he and Justice Holdings began to court Burger King in earnest. Because Justice Holdings is what's called a special-purpose acquisition company, or SPAC, Ackman focused on how the fund could assist a Burger King IPO, which 3G had targeted for the first quarter of 2012.