KEY POINTS:
Fast-food firm Restaurant Brands says it has given up entertaining private equity investors, but has stopped short of saying the business is not for sale.
The troubled company will step up its search for a new chief executive and is turning to the master franchise owner of Yum! Brands in Australia to help Pizza Hut out of trouble.
Restaurant Brands chairman Ted van Arkel said yesterday talks with prospective buyers had been "discontinued".
The move, which followed a one-month extension for talks with one unnamed player, would allow Restaurant Brands to avoid the distractions of the past six months, he said.
Van Arkel dismissed interest from four parties - including private equity firms Pacific Equity Partners and CVC Asia-Pacific - as "tyre-kicking" and not proceeding to a firm offer.
But he stopped short of earlier indications that he would announce the company was "not for sale".
"While no further dialogue is expected in the short term, the board remains focused on maximising shareholder value and is willing to consider proposals which it believes may be in the best interests of shareholders."
He said no company was in the position of ruling out future takeover activity.
Van Arkel has rejected suggestions that the board of directors' approach was based on too high expectations.
And he has vigorously rejected market speculation that this was a factor in the decision of former chief executive Vicki Salmon to resign in March.
One source said the board had based its expectations on an early offer of $1.56 from CVC Asia-Pacific that was withdrawn when it became apparent some of its KFC franchise agreements had a limited lifespan.
Restaurant Brands resolved those issues by bringing forward the agreements with Yum! Brands but the CVC bid did not resume.
The source suggested that one interested party had indicated a bid that was "well north" of $1.20 a share, which was rejected. Van Arkel said the relationship with Yum! Brands offering marketing advice for Pizza Hut would become closer but he expected there would be progress with the company process of closing down Pizza Hut restaurants.
Six of the 12 remaining sit-down restaurants would be closed this year.
Van Arkel agreed that sale to private equity might have allowed the company to improve its Pizza Hut operations more rapidly by delivering more capital.
But although one analyst said the company needed a rapid makeover of Pizza Hut to counter competition from Dominos and Hell Pizza, Van Arkel said there were limits on the speed of change.
It had been difficult to find a chief executive to replace Salmon, but he said it would be easier now that the company was no longer involved in sale talks.
Share market analyst Guy Hallwright of Forsyth Barr was not surprised that nothing had come from talks to private equity.
Restaurant Brands' share price dropped just 1c to 90c after confirmation sales talks had fallen through.
Hallwright said Restaurant Brands - which owns KFC, Pizza Hut and Starbucks Coffee in New Zealand - still represented value. Forsyth Barr had valued the company at $1.05 a share.
He said KFC was a good business and Pizza Hut was "probably fixable" but said there was limited likelihood of any new bids emerging soon.
A sharemarket analyst who would not be named was more sceptical about the company's prospects, saying the outcome of the long-running talks was a bad sign.
"This is at a market when there is a lot of private equity money slushing around.
"If you are not going to find a buyer now or even an offer, you are never going to find one," the analyst said.
Hallwright said Restaurant Brands was in better shape now that it had disposed of its money-losing investment in the Pizza Hut chain in Victoria.
The aim now would be to build the Pizza Hut brand, though it was not clear how much say the master franchise owner for the chain, Yum! Brands, would have in how that was achieved.
Food for thought
* Restaurant Brands has stopped talking to prospective new owners but has stopped short of saying it is "not for sale".
* It has renewed a search to replace chief executive Vicki Salmon, who left suddenly on March 14.
* The fast-food firm is turning to Australia to help its troubled Pizza Hut operations.
