Mexican bid for Restaurant Brands passes major hurdle

Restaurant Brands, the parent of KFC, looks set to change hands. Photo/File.

Finaccess Capital's $881.5 million bid for three-quarters of Restaurant Brands has passed an important test, coming in well above the independent advisor's valuation range.

In fact, it's hard to draw on any recent takeover offers that were priced as far above the independent advisor's assessment as this one (see table below) - notwithstanding the premium for control the Mexican acquirer is offering.

And as already foreshadowed last month (some say prematurely), Restaurant Brands' independent directors have given the bid the thumbs up and are now recommending shareholders do the same.

It's interesting how directors of target companies respond to takeover offers prior to the independent report being made public.

In this case, the board indicated early on that subject to the $9.45 offer price being within or above Grant Samuel's valuation range it would recommend shareholders accept the partial takeover.

Mohandeep Singh, an analyst at Craigs Investment Partners, reckoned the board may have been under pressure from shareholders to give a view given the time lag from the first announcement of the potential offer.

RBD first signalled it had received a proposed takeover offer on October 18 and then gave an update on November 9.

"They may have been getting quite a bit of pressure from investors who were saying: 'We are in limbo here'."

The offer, which has now been sent to shareholders, is unusual in that it is only for up to 75 per cent of the company.

The Grant Samuel report, which valued Restaurant Brands at between $1.02 billion and $1.11 billion, including a premium for 100 per cent control, noted that because the deal is a partial takeover, shareholders can only be certain of selling 75 per cent of their shares.

Therefore there is likely to be scaling of acceptances.