Restaurant Brands International (QSR) Misled Shareholders in Connection with its Secondary Offerings
Restaurant Brands offered 24 million shares at $73.50 per share in its August offering, which gave the controlling stockholders $1.8 billion in proceeds and reduced their stake in the Company from 41% to 36%. In the September offering, the controlling stockholders sold more than 16 million shares at $75.10 each for another $1.3 billion in proceeds. The complaint alleges that the registration statements in support of the offerings were misleading. Specifically, they falsely represented the Company’s growth potential, misleadingly touted the success of the Tims Rewards program, and failed to disclose that frequent data metrics showed the failure of the Tims Reward program in driving sustainable growth. To the contrary, the loyalty program was dragging sales and generated an unreasonable level of discounting that outweighed customer traffic. Thereafter, Restaurant Brands’ 2019 Q3 & Q4 financial results revealed weaker than expected sales and that the loyalty program was not working as expected. Just over a year from the secondary offerings, the stock now trades at just $51.