* Shares rise nearly 15 percent

(Adds information from source in lead, paragraph 6)

NEW YORK/LOS ANGELES (Reuters) - Burger King
Holdings Inc, the second biggest U.S. hamburger chain,
is in talks to sell itself to investment firm 3G Capital, a
source briefed on the situation said Wednesday.

Shares in the company rose nearly 15 percent Wednesday
following reports overnight that it was in talks on a sale.
Burger King's shares closed up $2.41 to $18.86.

The second-biggest U.S. hamburger chain has underperformed
McDonald's Corp and other fast-food chains. As of
Tuesday's market close, shares in Burger King had posted a
year-to-date loss of nearly 13 percent, while McDonald's shares
gained 17 percent in the same period.

The Miami-based company, which has a market capitalization
of about $2.5 billion, debuted as a public company in May 2006
with an initial share price of $17.

3G Capital, a little known investment firm, did not return
requests for comment and a Burger King spokesman declined to
comment. News of the negotiations with 3G Capital was first
reported by the New York Times.

Talks are advanced and a deal could potentially be reached
in the coming days, the source who spoke to Reuters said. The
source declined to be identified because the talks are not

"We would view this as an excellent opportunity for
investors who have been in the shares to cut their losses (or
take some modest gains, depending on when shares were bought),"
Janney Montgomery Scott analyst Mark Kalinowski said in a

"Burger King may actually be better off as a privately held
entity at this point in its history," Kalinowski added,
referring to the company's strained relations with franchisees
and its struggles to better compete against McDonald's, which
has been expanding its share.

Begun in 1954, this would not be the first private equity
takeover for Burger King. In 2002, British drinks giant Diageo
sold it a group of funds controlled by TPG Capital LLC,
Bain Capital LLC and Goldman Sachs. The private equity
group still owns about a third of the company.

"While we would not consider a transaction a foregone
conclusion, we see several factors that make a buyout
plausible," R.W. Baird analyst David Tarantino said in a note.

Private equity firms have become increasingly active and
last month was the busiest August since 1999 in terms of the
value of merger and acquisition deals struck.

A sale would give Burger King's current private equity
investors a "logical exit from their positions", Tarantino

One of the potential suitors named in press reports,
British private equity firm 3i Group Plc, distanced
itself from a possible deal.

"We can confirm that we are not in discussions with Burger
King," a spokeswoman for 3i said.

Burger King last week forecast weak demand during its new
fiscal year due to the U.S. economy's slow pace of recovery and
government austerity programs in several European countries.
The company said it was unsure how costs for key ingredients
like beef would impact the company.

Its shares hit a low of $16.30 in mid-August, but surged to
$19.50 in premarket trading Wednesday.

In July, an affiliate of Apollo Management wrapped up its
$694 million acquisition of Carl's Jr parent CKE Restaurants
Inc and a Golden Gate Capital affiliate bought On the Border
Mexican Grill & Cantina from Brinker International Inc
for about $180 million.

Wendy's/Arby's Group Inc Chairman Nelson Peltz in
June said an unnamed party expressed interest in a potential
deal involving the fast-food company.

Meanwhile, chains like California Pizza Kitchen
and Benihana Inc are seeking buyers.
(Reporting by Megan Davies and Paritosh Bansal in New York,
Simon Meads in London and Lisa Baertlein in Los Angeles;
Additional reporting by Krishna N. Das in Bangalore and Ben
Klayman in Detroit; Editing by Dave Zimmerman, Gunna Dickson,
Leslie Gevirtz and Carol Bishopric)