Diageo today played down any imminent moves to sell-off its Burger King subsidiary following weekend press reports that it is in talks with Texas Pacific, for a $3 billion sale.
A spokeswoman for Diageo said the group was still working to its original timetable for a partial flotation of Burger King - scheduled for later this year or early in 2002.
But some analysts reckon that the crisis over BSE, last week's second quarter warning from rival hamburger group McDonald's Corp and the recent appointment of Mr John Dasburg as Burger King chief executive may have put a potential flotation on hold.
"There is a slim chance that a management buyout could succeed, but there are timing issues to be resolved before any such plan could go ahead," one market source said this morning.
Diageo faces a $1.5 billion tax liability if Burger King is divested before 2003.
Mr Dasburg, who took over at BK in February, is thought to be keen on a management buyout and Texas Pacific is believed to be Diageo's preferred firm to lead negotiations.
Half-year operating profits from Burger King for the six months to December 2000 showed a decline of 7 per cent to £99 million sterling as intense competition within the quick service restaurant business and the roll-out of new stores and promotions hit profitability.
Last week's warning from McDonald's highlighted concerns over the tough trading environment for fast-food operators and saw Diageo shares weaken late on Friday evening.
AFP