Mubadala’s message at Burger King

Behind the scenes, the Arab fund has said that it will not increase the price of the takeover bid and that it may close the position

After opposition from the board of directors and a group of shareholders to Mubadala’s bid for control of Burger King, Abu Dhabi’s sovereign wealth fund has been trying to increase the pressure behind the scenes to try to make its plans viable.

According to sources, Mubadala has made it clear to some shareholders in recent days that it not only rules out increasing the price per share proposed in the OPA, but also considers zeroing its position in BK if the transaction does not go ahead.

The fund has 4.95% of BK Brasil, recently renamed Zamp. Mubadala offered R$ 7.55 per share, which at the launch of the OPA, in early August, represented a premium of 21.6% over the last closing. The fund’s interest has made the stock rise since then – on Friday, it closed at R$8.17.

The fund aims at 45.15% of the capital in the OPA to reach 50.1% of the BK, thus assuming control of the business – the offer will only be effective if there is sufficient adhesion for this.

The auction is scheduled for September 15. Last Friday, the Abu Dhabi fund republished the public notice to correct technical points requested by the CVM, without changing the price.

Two weeks after the fund published the proposal, BK/Zamp’s board of directors advised shareholders to reject the offer. The board hired BTG Pactual as its advisor on the matter, and the bank reached a fair value between R$9.6 and R$13.47 for the BK share. At the midpoint of the range considered fair by BK’s advisors, the shares came out at R$11.73, costing R$1.4 billion to Mubadala — which is willing to pay R$938 million.

After the board’s statement, Atmos, Fitpart, BW, Mar and Vista Capital also decided to publicly record that they have no interest in the proposal made and will not adhere to the OPA at R$7.55 per share. This group represents 20.44% of Zamp’s capital.

Shareholders understand Mubadala’s recent signals as contradictory, since the fund launched the OPA arguing that the company has high potential for growth and value creation for shareholders.

“If they think the deal is good and with potential for return, why would they close the position at such a low price? It is an attempt to correct the recent rise in the share, which carries the expectation of a price readjustment in the proposal, to increase adherence to the OPA without changing it”, an investor told Pipeline.

Mubadala has US$284 billion of assets under management, including a small portion of third-party capital. In Brazil, the portfolio is around US$ 5 billion. JP Morgan advises Mubadala on the OPA.

Source: Value Pipeline