Burger King Holdings Inc. (BKC) shares jumped 16.7% to $19.19 on Wednesday pre-market trading, on the news that the company is in talks with potential buyers. The two interested parties can be a British private-equity firm 3i Group Plc, and a private investment firm 3G Capital Management.
One potential candidate 3i Group Plc confirmed that it is not in discussion with the Miami-based company Burger King. However, the status of the talks is unclear with the other suitor and Burger King has not yet commented on this issue.
We believe that the company will continue to struggle in fiscal year 2011, as Burger King expects the next year to remain challenging due to the continuation of sluggish economy and a weak consumer environment, resulting from the high unemployment rate. Though the possibility of the deal being finalized seems negligible, but based on the economic challenges being faced by the company, any such deal will be beneficial to the company.
We have a Zacks #4 Rank (short-term Sell recommendation). We also reiterate our long-term Neutral rating.
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