By Emon Reiser


Restaurant Brands International, the Canadian conglomerate behind fast-food chains including Tim Horton's and Popeyes, disclosed two transactions that accelerate its growth in China.

RBI on Monday said it agreed to acquire Popeyes China from TH International, also known as Tims China, on an enterprise value of $15 million. As a result of the deal, RBI will own and operate 14 additional restaurants in Shanghai.

RBI is also co-investing in Tims China with Cartesian Capital with the goal of developing more restaurants in one of its largest markets globally.

China represents a long-term play for the Toronto-based company, whose portfolio includes Burger King and Firehouse Subs.

"Popeyes China is off to a strong start and we are excited to unlock its development potential in one of the largest chicken QSR markets globally," said Rafael Odorizzi, RBI's president of Asia Pacific.

The company eventually aims to bring on local partners "to form a more traditional master franchisee, similar to other Popeyes international markets."

RBI and Cartesian Capital have agreed to jointly invest up to $50 million of capital in the Tims China business via three-year convertible notes. Of that, $40 million will be issued at closing with the balance funded over seven months.

The three-year notes are convertible into preferred shares of Tims China, which convert to ordinary shares at a price per share based on 110% of the volume-weighted average price for the five trading days immediately prior to closing of the transaction.

Of the $50 million in capital, RBI will receive up to $30 million, including $20 million at the close of the transaction. Cartesian was issued $20 million.

With the larger share, RBI will have the right to appoint two directors to the Tims China board as its equity ownership in the business increases to up to 18% after the transaction.

"This year will be a pivotal one for us, and fortifying our balance sheet is an important step forward towards ensuring our long-term success in this highly competitive market," said Yongchen Lu, CEO of Tims China, said.


Write to Emon Reiser at emon.reiser@wsj.com


(END) Dow Jones Newswires

07-01-24 0928ET