Billionaire investor Warren Buffett, who agreed to help finance Burger King Worldwide Inc.’s planned takeover of coffee-and-doughnut chain Tim Hortons Inc., said the deal wasn’t motivated by taxes.
“The highest amount of federal taxes that Burger King has paid in any of the last three years has been $30 million,” Buffett said Thursday on MSNBC. That’s a fraction of the more than $11 billion that the Miami-based fast-food chain agreed to pay for Oakville, Ontario-based Tim Hortons. The combined company will be based in Canada, which has a lower federal tax rate than the U.S.
President Barack Obama’s administration and Congress have been weighing how to dissuade U.S. businesses from moving to other nations in search of lower corporate tax bills. Between mid-June and late July, at least five large American companies announced plans to make such a shift, known as an inversion. That includes AbbVie Inc. and Medtronic Inc.
Buffett said that while the Burger King deal fits the definition of an inversion, it should be distinguished from transactions in which companies shift valuable intellectual property to other nations. Inversions can also limit obligations to the U.S. on profits earned abroad.
“There isn’t a whole lot of intellectual property to transfer with hamburgers,” Buffett said. “This is not a case of trapped cash, it’s not a cash of intellectual property. It’s a case of the larger company being in Canada.”
Buffett’s Berkshire Hathaway Inc., based in Omaha, Nebraska, agreed to invest $3 billion for a preferred stake in the new company paying an annual dividend of 9 percent.
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