Restaurant Brands International Inc., owner of the Burger King and Tim Hortons fast-food chains, has approached Popeyes Louisiana Kitchen Inc about a possible acquisition, people familiar with the matter said on Monday.
Shares of Atlanta-based Popeyes moved sharply higher on the news. The stock was up $4.78 US, or more than seven per cent, to $70.82 US on Nasdaq.
A deal would be a bet by Oakville, Ontario-based Restaurant Brands that it can use its international reach to introduce Popeyes' famous Louisiana-style fried chicken and buttermilk biscuits to more diners globally.
RBI and Popeyes have yet to agree on a deal price, and there is no certainty that negotiations will continue, the people said. Restaurant Brands has also been considering the acquisition of other companies, one of the people added.
The sources asked not to be identified because the matter is confidential. Popeyes declined to comment, while Restaurant Brands did not immediately respond to a request for comment.
Restaurant Brands shares rose almost 4½ per cent to $70.22 in Toronto.
Popeyes, whose fans include pop singer Beyoncé, began 45 years ago as a Southern-fried "Chicken on the Run" restaurant in a New Orleans suburb. It has since expanded to more than 2,000 restaurants, of which 1,600 are in the United States.
The company has benefited from strong customer loyalty, as well as from a restaurant refurbishment program.
Chicken accounts for about 10 per cent of the fast-food industry, according to data service IBISWorld, and Popeyes' market share is growing. The largest brands in the sector include privately held Chick-fil-A and Yum! Brands Inc's KFC.
Private equity firm 3G Capital, which is controlled by Brazilian billionaire Jorge Paulo Lemann, owns about 43 per cent of the voting shares in Restaurant Brands. 3G Capital has made a name by acquiring major U.S. consumer companies including Kraft Heinz Co.
Restaurant Brands was formed in 2014, when 3G Capital-backed Burger King acquired Canadian coffee and doughnut chain Tim Hortons Inc for $11 billion.
3G Capital's long-time partner, Warren Buffett's Berkshire Hathaway Inc, committed $3 billion of preferred equity to finance that deal.