Burger King to Buy Tim Hortons Chain for About $11.4 Billion

Tuesday, 26 Aug 2014 08:31 AM

 

  Comment  |
   Contact  |
  Print  
|  A   A  
  Copy Shortlink
Burger King Worldwide Inc. agreed to acquire Tim Hortons Inc. for about 12.5 billion Canadian dollars ($11.4 billion) in a deal that creates the third-largest fast-food company and moves its headquarters to Canada.

Tim Hortons investors will receive C$65.50 in cash and 0.8025 a share of the combined entity for each share they own, the companies said in a statement today. The price deal values each Tim Horton share at C$94.05 based on Burger King’s closing price yesterday.

The purchase gives Burger King access to a coffee brand with a cult following, which may help boost breakfast sales. Tim Hortons, Canada’s biggest seller of coffee and doughnuts, also lets Burger King get into the grocery business by selling packaged coffees at supermarkets in North America. The new combined business would have about $23 billion in system sales and more than 18,000 restaurants in 100 countries.

The acquisition also moves the merged company’s global headquarters to Canada to take advantage of lower corporate taxes. When the companies disclosed the talks on Aug. 24, it revived debate over American companies shifting their headquarters to other countries in search of lower corporate tax bills. President Barack Obama criticized the practice in July, and his aides said that the administration would take action to stop the trend.

Buffett’s Help

3G Capital, the investment firm that owns Burger King, will have about 51 percent of the new company. Warren Buffett’s Berkshire Hathaway Inc. also has committed $3 billion of preferred equity financing, according to the statement, which didn’t disclose terms on the stake. Omaha, Nebraska-based Berkshire won’t participate in managing the restaurant business.

3G, which was co-founded by Brazilian billionaire Jorge Paulo Lemann, joined Buffett last year in a $23.3 billion takeover of HJ Heinz Co. Buffett bought half the ketchup maker’s common stock for about $4.25 billion and invested $8 billion for preferred shares that pay a 9 percent annual dividend and gave Berkshire warrants to buy an additional 5 percent stake.

“3G does a magnificent job of running businesses,” Buffett said in May at his company’s annual meeting in Omaha. “We’re very likely to partner with them, perhaps on some things that are very large.”

Burger King, the second-largest U.S. burger chain, has struggled to boost North American same-store sales and compete with McDonald’s Corp.’s breakfast fare. Buying Tim Hortons would give Burger King a coffee brand that’s coveted by Canadians, as well as some Americans, to help revamp its breakfast lineup.

Burger King also may be in a position to expand Tim Hortons restaurants in the 98 countries where it operates. There may be supply-chain, marketing and administrative cost savings.

Within the new parent company, the two chains will remain stand-alone businesses and maintain their current headquarters. Burger King is run from Miami, while Tim Hortons is based in the Toronto suburb of Oakville.

© Copyright 2014 Bloomberg News. All rights reserved.

  Comment  |
   Contact  |
  Print  
  Copy Shortlink
Around the Web
Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Country
Zip Code:
Privacy: We never share your email.
 
Hot Topics
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
You May Also Like

OPEC Rocked by US Fracking, Can't Cut Production

Thursday, 27 Nov 2014 14:23 PM

OPEC took no action to ease a global oil-supply glut, resisting calls from Venezuela that the group needs to stem the ro . . .

Toyota Recalls More Cars for Dangerous Takata Air Bags

Thursday, 27 Nov 2014 14:26 PM

Toyota Motor Corp. recalled more vehicles in Japan on Thursday as part of a worldwide scare over defective air bags and  . . .

Harvard's Feldstein: Low Oil Prices Help US as Iran, Russia Suffer

Wednesday, 26 Nov 2014 16:30 PM

Harvard economist Martin Feldstein says "the low price of oil is good news for the United States economy, because it imp . . .

Most Commented
Top Stories

Newsmax, Moneynews, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, NewsmaxWorld, NewsmaxHealth, are trademarks of Newsmax Media, Inc.

 
NEWSMAX.COM
America's News Page
©  Newsmax Media, Inc.
All Rights Reserved