Insiders launch bid for Burger King

BURGER King proprietors have teamed up with buyout specialists Texas Pacific in a move to buy the fast-food chain from Diageo. The drinks giant is trying to sell Burger King to focus on brands such as Guinness, Smirnoff vodka and Johnnie Walker whisky.

But Burger King, with 678 UK restaurants, has underperformed in recent years and analysts say Diageo will struggle to get anywhere near the suggested £2bn asking price.

Diageo, which hopes to sell the chain by the end of the year, has had interest from 'more than 10' parties. But industry observers say that Burger King's management, based in Florida, and the franchisees are front-runners because they have the 'inside track'.

Julian Josephson, chairman of Burger King's franchisee association, and Texas Pacific have approached the financial advisers handling the disposal for Diageo. Josephson has indicated that Burger King's Miami-based management team, headed by John Dasburg, would be offered equity as part of the buyout. Such a deal would be quicker and cleaner than a flotation or a sale to a third party, which could need months of document examination and price haggling.

Two weeks ago, Diageo sold its Malibu rum brand to rival Allied Domecq for £560m. It now seems increasingly keen to sell Burger King.

Dasburg is highly regarded by the franchisees. They are highly critical of Diageo's 'revolving door' management and what they see as its lack of vision for the chain, which has struggled as number two to McDonald's worldwide.

'By any measure, we are the major shareholders in the franchise,' said Josephson, 54, a South African who started with four US Burger King restaurants in 1978 and now owns 40. 'We can't wait to see Burger King separated from Diageo. Frankly, we're disappointed that Diageo has not come out with a timetable of when the separation will take place.'

Josephson, irritated by what he calls Diageo's 'rude' treatment of restaurant owners since a previous offer was broached a couple of years ago, said he was opposed to a stock market flotation because it would 'drag out' the process. 'They confuse me,' he said of Diageo's management. 'If they want a rapid, clean separation it would make sense to sell to committed ownership with management in place.'