Popeyes Louisiana Kitchen Inc (NASDAQ:PLKI) has been approached by Restaurant Brands International Inc (TSE:QSR) for a possible acquisition. Restaurant Brands International owns Tim Hortons and Burger King fast-food chains. If the acquisition plans go ahead, it could mean that Restaurant Brands is confident that it can introduce buttermilk biscuits and Louisiana-style fried chicken from Popeye to the rest of the world.
Courting other possible acquisitions
According to sources, Popeyes and Restaurant Brands International have not agreed on a price yet and the negotiations are not guaranteed to continue. Sources also added that besides Popeyes, Restaurant Brands International had also been eyeing other firms for possible acquisitions.
“I know they want to acquire additional restaurant concepts. That was the fundamental reason they created this umbrella company Restaurant Brands [in December 2014],” a source informed the New York Post.
Popeyes was founded 45 years ago in a New Orleans suburb as a Southern-fried chicken fast food restaurant. Since its founding, the chain has opened more than 1,600 restaurants in the United States and 400 others outside its home country.
Steadfast customer loyalty
As a restaurant brand, the firm has benefited from strong customer loyalty. Some of the famous personalities who consider themselves fans of the brand include Beyonce. The brand has also benefited from a restaurant refurbishment program that is paying dividends and this has resulted in Popeyes’ market share growing. In the fast-food sector, chicken accounts for approximately 10 percent of the business.
One of the major shareholders in Restaurant Brands is 3G Capital, a private equity firm. The PE firm, which is controlled by Brazilian interests, has previously acquired other consumer firms in the United States. Berkshire Hathaway Inc. (NYSE:BRK.A) also has a stake in the 3G Capital.
The formation of Restaurant Brands International happened in 2014 after the $11 billion acquisition of Tim Hortons, a Canadian doughnut and coffee chain, by Burger King. Out of the $11 billion that was used to acquire Tim Hortons, $3 billion was contributed by Berkshire Hathaway.
In Monday’s trading session, shares of Restaurant Brands International Inc jumped by 4.48 percent to close the day at $70.22.