The actions of BK Brazil soared this Monday (1) after the Brazilian operator of fast-food chains announced that canceled a deal with private equity group Vinci Partners to buy Domino’s Pizza no country.
According to a document filed on Sunday, the transaction was canceled due to adverse market conditions.
BK Brasil shares rose 8.6% at 12:43 pm, while the Ibovespa advanced 1.7%.
In mid-July, BK had announced an agreement to acquire Domino’s Pizza Brasil, which would make it the largest operator of fast-food from the country. Vinci would hold 16.4% of the shares of BK Brasil.
“The parties reassessed the current market conditions vis a vis the conditions at the time of negotiation and signing of the aforementioned association agreement”, says an excerpt of the document. Since the announcement of the deal, BK Brasil shares have fallen by around 40%.
BK Brasil, owner of the Burger King and Popeyes brands in the country, said the termination established a 12-month preemptive right for BK to match any offer from a third party in the event of a Domino’s sale agreement. Termination of the contract carries no penalties, added BK.
Analysts at Goldman Sachs said they expected the measure to be positively received by the market, despite seeing “strategic merit” in the association.
“The termination … reduces the complexity of the business at a time when short-term operating conditions remain volatile, allowing management to refocus on normalizing Burger King Brazil’s core businesses BK and Popeyes,” analysts said.
Reference: CNN Brasil
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