Burger King fast-food can be found all over the world including Jamaica where there are several branches

LONDON (AP) -- Diageo's liquor cabinet is proving no home for the Whopper.

British drinks group Diageo PLC said Friday it's ready to sell or spin off Burger King Corp and that it expects next month to start approaching potential buyers for the fast-food chain.

Diageo will decide "over the next few weeks" how best to uncouple itself from Miami-based Burger King, said Diageo spokeswoman, Kathryn Partridge.

"It's a great business, but it's so firmly non-core to Diageo that I'd be surprised if management wanted to hang on to it for a lot longer," Partridge said.

Among the options being considered are a management buyout, a sale to another company in the food business, and an initial public stock offering.

British analysts estimate Burger King to be worth around £1.6 billion ($2.3 billion), with some suggesting that the business could sell for almost twice that amount.

Diageo has long said it plans to unload Burger King, as part of its strategy to concentrate on the much more profitable business of making and selling alcoholic beverages. The group's best-known brands include Smirnoff vodka, Johnnie Walker scotch and Guinness beers.

Diageo sold its Pillsbury foods unit to General Mills Inc in October. Except for a 22 per cent stake in General Mills, Burger King is Diageo's only remaining non-liquor business. It contributes six per cent to Diageo's group sales and profits.

Until now, Burger King wouldn't have made a very tasty acquisition. Sales at the chain's 11,435 outlets had been slipping for 18 months, and analysts say the business suffered from a lack of innovation and attention to quality control.

Competition from market leader McDonald's has taken a toll. Whereas McDonald's opens a new outlet at an average rate of once every six hours, Burger King opens a new restaurant once every 42 hours, said analyst Stuart Price at investment bank WestLB Panmure.

Burger King has suffered also from the association many people around the world make between McDonald's and American culture.

"You can't compete with that," Price said.

However, a new management team, led by former Northwest Airlines chief executive, John Dasburg, has started to improve quality control standards and "completely reconfigured" Burger King's internal structure, Partridge said.

The results, evident in Diageo's most recent interim results released Thursday, have been the first increase in Burger King's sales -- by a modest one per cent -- since the end of 1999.

Some analysts argue that Burger King's track record for growth is still too short to justify an initial public offering of stock. The current economic downturn might also make it harder for Diageo to arrange a successful share issue.

Rather than wait indefinitely for stock markets to rebound, Diageo is more likely to pursue a buyout, either by an established player in the food industry or by Burger King's own management, analysts said. A management buyout, done with financial backing from an investment firm such as Texas Pacific Group of Fort Worth, Texas, is the likeliest outcome, according to a source close to the issue.

Burger King's separation from Diageo should be largely complete by the end of the year, analysts said.

Diageo shares closed 0.06 per cent higher at 811 pence (£11.60) each on the London Stock Exchange.

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