Finance Article
Burger King set to acquire Tim Hortons for $11.4 billion
Burger King Worldwide agreed Tuesday to buy the Canadian restaurant chain Tim Hortons for about $11.4 billion, creating one of the biggest fast-food operations in the world - with a little help from Warren E. Buffett. As part of the transaction, however, the US burger giant will move its home to Canada, where the combined company's biggest market will be.
Under the terms of the deal, Burger King will pay 65.50 Canadian dollars in cash and 0.8025 of one of its shares for each Burger King will pay 65.50 Canadian dollars in cash and 0.8025 of one of its shares for each Tim Hortons share. That amounts to about 94.05 Canadian dollars a share, or $85.78 a share, based on Burger King's closing price Monday. The combined company will have 18,000 restaurants in 100 countries, and $23 billion in annual revenue.
But while Burger King will relocate north of the border, raising concerns about yet another company moving abroad to reduce its tax bill, the switch in corporate nationality appears more aimed at appeasing Canadian regulators wary of a foreign company buying a national icon like Tim Hortons.In fact, Burger King is expected to save a little bit on taxes through the so-called corporate inversion, rather than enjoy a huge reduction, according to people involved in the transaction.
The two companies emphasized that each would continue to be run from its current home base, with Tim Hortons operated out of Oakville, Ontario, and and Burger King from Miami. Neither is altering their franchisee agreements or business models.
And the two pledged to draw from Tim Hortons' ranks of executives to help staff the new parent company. Marc Caira, the Canadian chain's chief executive, will become vice chairman and oversee global strategy and business development. Daniel S. Schwartz, Burger King's chief executive, will hold onto that title at the newly combined company. 3G Capital, the Brazil-based investment firm that controls Burger King, will retain majority control of the combined company, with a 51 per cent stake. Alex Behring, 3G's managing partner, will be executive chairman at the merged company.
"Our combined size, international footprint and industry-leading growth trajectory will deliver superb value and opportunity for both Burger King and Tim Hortons shareholders, our dedicated employees, strong franchisees, and partners," Behring said in a statement.