The fast food chain Burger Ranch won yesterday's tender for the troubled Burger King chain, by offering the highest bid of NIS 30 million in cash for the chain's operations. Burger King has been run by a court-appointed trustee since February after Rikmor, the Burger King franchisee in Israel owned by Meshulam Riklis, filed for court protection from its creditors.
The final decision to sell Burger King's operations to Burger Ranch will be submitted by trustee Doron Tischman to Tel Aviv District Court on Tuesday for Judge Varda Alshech's approval. Burger King's global company will have its chance to speak before the judge, as will the trustee and the competing bidders.
Burger Ranch stated clearly that it was offering to buy only the troubled fast food chain's activities, while Orgad's offer included buying Burger King's local trademark too. If Burger Ranch's bid is successful - receiving the necessary approval not only from the court but from antitrust commissioner Dror Strum as well - then the name Burger King will drop out of the local market, and the sector will be dominated by just two chains - Burger Ranch and McDonald's.
McDonald's and Burger Ranch had originally planned to submit a joint bid for Burger King's activities, but this was scotched by Strum, who would not countenance any joint bid by the two competitors. The two had originally submitted a bid of NIS 26.4 million cash.
Burger King trustee Tischman earlier set the minimum price for the fast food chain auction at $5 million, which he based on the second highest original bid, received from Orgad Holdings, which had offered NIS 20.5 million in cash, in addition to a payment of royalties over four years.
The reserve price also succeeded in knocking out four of the potential bidders, leaving only Orgad Holdings, the U.S. Cornerstone, a consortium led by businessman Danny Brenner and the victorious Burger Ranch. Others that had expressed interest included the Yunes group, a Canadian group, a European consortium and Edmond de Rothschild.
McDonald's removed itself from the auction during the week, when it decided not to put up the bank guarantees for the joint bid with Burger Ranch, though the company had not released details of its leaving the race until yesterday, "to allow the others to offer bids," explained Omri Padan, owner and chairman of McDonald's Israel, "and to raise their respective offers. [Being aware of] McDonald's leaving would have caused the eventual sale to go for a mess of pottage."
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