Published on : Aug 27, 2014
Renowned investor Warren Buffet plans to finance Burger King Worldwide Inc.’s acquisition of Tim Hortons Inc., the Canadian coffee chain.
Berkshire Hathaway Inc., Warren Buffet’s firm will invest through preferred shares, it is speculated. Nearly 25% of the deal’s financing would be handled by Berkshire. The precise aim for Warren Buffet’s participation is yet unclear, while discussions between the companies continue.
The takeover is predicted to be valued at $10 billion and could be announced within a couple of days. Shareholders linked to the tie-up were optimistic about the deal, stating that Warren Buffet’s image as a successful investor would help.
The deal has also received some criticism from the U.S. government over the country’s tax policy. Should the acquisition be successful, the new company’s headquarters would be inverted over to Canada, helping the company sidestep taxes.
This would also mark another deal between Berkshire Hathaway and 3G Capital Management, the controlling shareholder of Burger King. Warren Buffet had previously helped 3G Capital Management take control of H.J. Heinz & Co. for $23 billion, for which Berkshire invested half the total value.
The current deal is drawn on the lines of Warren Buffet showing interest in the management of 3G Capital, and had previously agreed to partner with them on sufficiently large deals. Mr. Buffet has not yet commented on the deal.
A successful tie-up between Burger King and Tim Hortons could result in a global fast-food chain of more than 18,000 restaurants in more than 100 countries, with a system-wide sale of $22 billion.