Extremely lucky timing with the cover of Burger King (BKC) short cover yesterday, as reports surfaced overnight of one group of private equity guys wanting to buy from the old guard of private equity guys. This is pretty typical of the new American economy - shuffle pieces of paper (or companies) - the old buyers make money, the new buyers create a purchase structure so they cannot lose even if the company goes down the toilet, and the investment banks advising make fees. [BusinessWeek 2006: Burger King - Where's the Beef?] No need to improve the company - just keep doing the shuffle and layer on fees for the corporate raiders and associated parties. Everyone wins... except for the target company and its employees, in most cases! If Burger King were being run anywhere near as well as McDonald's there would be no stinky stock price nor opportunity to do the shuffle.
The stock is up some 15% in premarket.
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