Pavel Begun Having it His Way at Burger King? *

Investor news this morning is all a-broil with the story of 3G Capital's proposed acquisition of Burger King Holdings. Their offer came in at $4 billion USD. Is this a windfall for Burger King? Or is 3G Capital having it their way?

While $4 billion may seem like a lot of cash (and it is) - how impressive is it really to Burger King? Agreeably, Burger King's market cap has been as low as $2.2 billion in the past year. But, if we look at the offer, which equals $24/share and was readily accepted by BK's board of directors, it is interesting to note how far from generous it really is. Less than 2 years ago BKC stock was trading at over $25/share. But since that time, the stock (like many others) has lost significant value. In the case of BKC stock, nearly 30%.

3G Capital, on the other hand, seems to possess an increasingly solid financial position. Despite some losses, their fund has averaged over 9% returns since inception in 2004. The origins of this company are fascinating. Co-founder Paval Begun from Belarus was selling strawberries for a healthy profit in Minsk beginning at the tender age of 11. Which, by the way was not that long ago - 1989. His business sense and passion for investing has not wavered since. With over $50 million in assets and attracting more high-profile investors, 3G Capital is facing the economic downturn as an opportunity.

An organization's financial position impacts their ability to negotiate. A company in a strong financial position should be able to easily gain the upper hand in a negotiation. Based on the situation of these two companies, it is fairly certain 3G Capital was in a better position to negotiate a sale/purchase than the weakened Burger King Holdings, Inc. Begun prefers to invest in companies with solid business models and then wait for long-term appreciation. It seems like once again he is having it his way. This time at Burger King.

Sample Test Question Task 1-A-2:

The buyer's financial position is considered to be part of
A) the development of negotiation strategies and tactics.
B) an organization's cultural factors.
C) an analysis of the seller's/purchaser's positions.
D) the objectives of a negotiation.

Fee free to discuss below. Answer to be posted tomorrow.

*1/19/2011 Editor's Note: Although it can be found on CNBC, CBS, NY Daily News and countless other sites, there has been some discussion on the accuracy of 3G Capital actually attempting to buy Burger King Holdings. This site questions the feasibility . And a friend of Pavel's has contacted me directly to clarify that this is not an accurate story.