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RBI affiliate announces share exchange and secondary offering

Published 2024-08-12, 06:54 p/m
QSR
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TORONTO - Restaurant Brands International (TSX:QSR) Inc. (TSX: NYSE:QSR) (NYSE: QSR), a global quick service restaurant company, has announced that its affiliate, Restaurant Brands (TSX:QSP_u) International Limited Partnership (RBI LP), has received an exchange notice from an affiliate of 3G Capital Partners Ltd., HL1 17 LP, to exchange over 6.5 million Class B exchangeable limited partnership units into RBI common shares. This transaction is set to maintain the aggregate number of exchangeable units and common shares.

The exchange mechanism was established during the merger of Burger King and Tim Hortons, allowing stockholders to convert their shares into RBI common shares or Exchangeable Units, which are aligned with common shares in terms of dividends and voting rights. Since December 2015, holders of these units have had the option to exchange them for RBI common shares or cash, at RBI LP's discretion.

In addition to the exchange, the Selling Shareholder has initiated a registered public offering of the same number of common shares. BofA Securities has been appointed as the sole book-running manager for the offering. The Selling Shareholder is expected to enter into a forward sale agreement with BofA Securities regarding the shares, which will involve borrowing and selling shares to underwrite the offering and potentially selling additional shares to a current investor showing interest.

The Selling Shareholder will physically settle the forward sale agreement by delivering the common shares sold in the offering to the forward counterparty. The settlement, which will result in the Selling Shareholder receiving the public offering price minus underwriting discounts and commissions, is expected to be completed by August 30, 2024. RBI will not be selling any shares nor will it receive proceeds from this offering.

In other recent news, Restaurant Brands International (RBI) has reported growth in its second quarter of 2024, fueled by strategic acquisitions and increased digital sales. The company noted a 1.9% increase in comparable sales and a 4% net restaurant growth. RBI's acquisitions of Carrols Restaurant Group (NASDAQ:TAST) and Popeyes China, along with a 32% growth in digital sales for Popeyes, have been instrumental in this growth.

Despite challenges in the U.S. market, Burger King has managed to outperform the Quick Service Restaurant industry. However, RBI's revised forecast for unit growth, from an anticipated 4.5% to 4.0% for fiscal year 2024, has raised investor inquiries.

Stifel and Piper Sandler have adjusted their outlooks on RBI, reducing their price targets to $77 and $75 respectively, while maintaining a hold and neutral stance. Stifel's revision comes as RBI experiences mixed financial results, with strong performance at Tims Canada but weaker outcomes in the U.S. and international markets.

In response to these recent developments, RBI projects a system-wide sales growth of 5.5% to 6% and an 8%+ organic adjusted operating income growth for the full year. With a focus on cost optimization, strategic investments, and maintaining dividends, RBI continues to showcase confidence in its growth prospects.

InvestingPro Insights

As Restaurant Brands International Inc. (NYSE: QSR) navigates through its latest strategic financial maneuvers, the company's stock market performance and analyst outlook provide key insights into its future prospects. Notably, the company boasts a solid track record of raising its dividend, having done so for 9 consecutive years, which signals a commitment to returning value to shareholders. Additionally, the positive sentiment from analysts is evident, with 10 analysts having revised their earnings upwards for the upcoming period, reflecting confidence in the company's financial health and growth trajectory.

InvestingPro data underscores the company's financial stability, with a market capitalization of 31.47 billion USD, indicating a robust presence in the quick service restaurant industry. The company's price-to-earnings (P/E) ratio stands at a competitive 17.33, and when adjusted for the last twelve months as of Q2 2024, it shows an even more attractive figure at 16.36. This is complemented by a PEG ratio for the same period of 0.8, suggesting that the company's earnings growth is potentially undervalued relative to its share price.

However, investors should be aware of the company's valuation metrics, as it currently trades at a high Price / Book multiple of 10.25. This could indicate that the company's assets are richly valued in the market, a point of consideration for value-focused investors. For those seeking additional insights, InvestingPro offers further tips and metrics on Restaurant Brands International Inc., which can be found by visiting the dedicated page at: https://www.investing.com/pro/QSR. With several more InvestingPro Tips available, investors can gain a comprehensive understanding of the company's financial position and market potential.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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