Burger King in talks to buy Tim Hortons

[Acey]

Tuesday 8/26 update:

Deal is done.

The new combined company would be based at the current headquarters of Tim Hortons, in Oakville, Ont. Burger King would continue to maintain its global home in Miami.

The deal is structured as follows:

==3G Capital, the investment firm that owns Burger King, would pay $65.50 in cash for every Tim Hortons share already out there.
==In addition to that cash, every Tim Hortons shareholder would get 0.8025 shares in the new, as yet unnamed company.
==Shareholders also would have the right to choose an all-cash or all-stock option.

Sunday night:

Breaking News Money @breakingmoney
Report: Burger King in talks to buy Canadian chain Tim Hortons; deal to be structured as tax inversion - http://online.wsj.com/articles/burge...ons-1408924294

From what I understand of "tax inversion" this is just BK looking relocate headquarters to Canada and buying Tim Hortons is the way in, might not necessarily result in any change to either restaurant. Somebody who knows what they're talking about please clarify.

Burger King [...] is in talks to buy Canadian coffee-and-doughnut chain Tim Hortons [...] a deal that would be structured as a so-called tax inversion and move the hamburger seller's domicile abroad, according to people familiar with the matter.

The two sides are working on a deal that would create a new holding company based in Canada, one of the people said, adding that the takeover would create the third-largest quick-service restaurant provider in the world.

One of the people said a deal between the two companies could be struck soon, though additional details on timing couldn't be learned. Together the restaurant companies have a market value of about $18 billion.

By moving to a lower-tax jurisdiction, inversion deals enable companies to save money on foreign earnings and cash stowed abroad, and in some cases lower their overall corporate rate.

Such deals threaten to deplete U.S. government coffers, and they have drawn stiff opposition in Washington. Efforts are under way to limit their use.

After a tide of tax-inversion deals—including AbbVie Inc.'s purchase of Ireland's Shire SHPG and Medtronic Inc.'s agreement to buy Ireland's Covidien COV, with other deals expected in the coming months—the White House called on Congress to take steps to prevent companies from pursuing inversions.

The Treasury Department recently said it is assembling a list of options to deter or prevent the deals for Secretary Jacob Lew to consider. The Obama administration signaled earlier this month that it is considering regulatory action on inversions that could include earnings stripping.

A move by Burger King to invert is sure to intensify criticism of the deals, considering that it is a well-known and distinctly American brand.

In the current wave of such deals, most inversions have been struck by health-care companies. An inversion deal by Burger King would suggest that the deals have wider appeal beyond the health industry, as companies from a range of industries consider ways to become more competitive from a tax perspective.

Burger King was founded in 1954 with a single restaurant in Miami, where it is now based. It has since grown to be the world's second-largest hamburger chain, according to the company's website. There are more than 13,000 Burger King locations in nearly 100 countries, serving more than 11 million people daily, the site says.

Tim Hortons, based in Oakville, Ontario, is well-known for its coffee, a high-margin area where U.S. fast-food giants have raced to grab market share. Burger King has been adding more coffee items and flavors to its menus to catch up with rival McDonald's Corp., which has had success with a specialty coffee line called McCafe. Burger King paired up with Seattle's Best Coffee, a brand owned by Starbuck's Corp., to help its effort gain traction.

The brands would be managed separately under a Burger King-Tim Hortons deal, one of the people said.

Tim Hortons has shares that trade in the U.S. and Canada and a market capitalization of about $8.4 billion. Last year, hedge funds Scout Capital Management LLC and Highfields Capital Management LP announced stakes in the company and called for Tim Hortons to curtail its U.S. expansion plans and increase its leverage to buy back more shares.

In 2010, Brazilian private-equity firm 3G Capital Management bought Burger King and took the chain known for its Whopper burgers private. A few years later, the company structured a complex deal with an investment vehicle co-owned by activist shareholder William Ackman to go public again. The company now has a market capitalization of about $9.6 billion.

[bluejays]

Woah. I had no idea BK is large enough to make a play for such a big chain. I wonder what the premium paid to THI's shareholders will be?

[Pizza]

Arent they already owned by Wendy's?

if the sale goes through, would that mean those joint wendy's/tim's restaurants cease?

[Acey]

According to Wikipedia, as of 2006, Wendy's no longer has any shares in Tims.

[cam_wmh]

I think I like this.

Burger King > Wendys.

[Ducay]

Tims outside of their coffee (debatable) and bagels is a car wreck of a chain.

Their menu fragmentation is causing all kinds of bottom line problems, not to mention they're all horrific and processed.

In the last couple years, Tims has added:

-New Dark roast coffee (as if existing coffee wasn't acidic enough)
-Meat Lasagna (comes in concentrate)
-Creamy Noodle goop (da fuq)
-Paninis
-Crispy Chicken sandwiches (don't even have deep fryers to make them crispy)
-Hashbrowns (ditto above)
-Iced Lemonades (ice slurry with lemon syrup added at end)
-Smoothies (ice slurry with non-dairy creamer syrups added)
-Latte/Cappucinos (yum powdered milk)
-Snack Wraps

Literally none of those are "good" and are forcing franchisees to carry more and more inventory, more equipment, and more costs overall. It has been run horrifically since its IPO, look at the recent Sr exec turmoil there.

[Finger Cookin]

That menu fragmentation will go away in a hurry if BK takes over.

Here's a good article on how the company's been run in recent years, on Businessweek.com: http://www.businessweek.com/articles...3-years-old#p1

[calgarywinning]

Menu fragmentation is a result of trying to exploit the high traffic of Canadians that love spending their change on tim hortons double doubles. Can't blame them for trying, and quality has never been their forte.

I think a big challenge is the addition of cheap coffee at McDonald's. Also, chain never made it in the US marketplace.

[DownhillGoat]

Originally Posted by Finger Cookin

That menu fragmentation will go away in a hurry if BK takes over.

Even though they're still being managed independently and this move is really just a tax shelter?

[ExiledFlamesFan]

Very interesting. This is the first I've heard of an American company coming to Canada for tax inversion reasons. I wonder if we'll see more of this. It makes sense with the close relationship, NAFTA, proximity, same language, etc..

The future of the US and A is looking very shaky losing all this corporate tax revenue along with the very wealthy paying such a small amount in tax. Even Warren Buffet thinks he should pay more than 17.4%.

[Finger Cookin]

Originally Posted by kunkstyle

Even though they're still being managed independently and this move is really just a tax shelter?

Maybe, maybe not?

[JiriHrdina]

What happens to all those weird Wendys'/TH combo joints?

[pylon]

Originally Posted by Ducay

Tims outside of their coffee (debatable) and bagels is a car wreck of a chain.

Their menu fragmentation is causing all kinds of bottom line problems, not to mention they're all horrific and processed.

In the last couple years, Tims has added:

-New Dark roast coffee (as if existing coffee wasn't acidic enough)
-Meat Lasagna (comes in concentrate)
-Creamy Noodle goop (da fuq)
-Paninis
-Crispy Chicken sandwiches (don't even have deep fryers to make them crispy)
-Hashbrowns (ditto above)
-Iced Lemonades (ice slurry with lemon syrup added at end)
-Smoothies (ice slurry with non-dairy creamer syrups added)
-Latte/Cappucinos (yum powdered milk)
-Snack Wraps

Literally none of those are "good" and are forcing franchisees to carry more and more inventory, more equipment, and more costs overall. It has been run horrifically since its IPO, look at the recent Sr exec turmoil there.

This.

The fact that Canadians eat Tim Hortons food with such fervour, shows how brutally unsophisticated the Canadian pallet really is. Their bagels are OK, their coffee is passable for a $2 cup, that's it. But you can still get a better cup at a 7-11 or Macdonalds if that's your budget. You can get better looking and tasting food at Hospital cafeterias, homeless shelters and in prisons. 2 of which I have dined at, and got a superior tasting turkey sandwich or bowl of soup. They can't even make a breakfast sandwich right. Are those even eggs in them? and a english muffin should be toasted, not soggy.

The success of this chain is mind boggling. But as long as they keep pumping out stupid commercials telling everyone that "If you are a real Canadian, you'll consume our gruel." People will keep flocking in droves. Kinda like the CFL has done with it's horrible football.

It is like some twisted social experiment, to test how disgusting of food you could feed people, that somehow gave the most impossible result ever. The worse the food, the more they consume. Somewhere there is a government scientist sitting in a lab, with a loose tie, an overflowing ashtray, and a bottle of scotch on the desk, asking himself "What is wrong with these people? Why do they keep consuming this? And why do they keep supporting the CFL?"

Ok, I'm done now. Goodnight everyone.

[Clarkey]

That foamy spongy egg product on the breakfast sandwhich's is disgusting.

[Viking Whale]

Their food tastes fantastic, it's their prices that disgusts me(and change the damn lids already!)

[nik-]

"fantastic" ??

[pylon]

Originally Posted by Viking Whale

Their food tastes fantastic, it's their prices that disgusts me(and change the damn lids already!)

Well, then. If you want a real treat, you should take the Miss's to the Foothills hospital cafeteria for a real special night out sometime. I recommend the Grilled Cheese, cello-wrapped celery sticks, and delectable Jello parfait for dessert.

Thank me later.

[getbak]

The weirdest thing about their food is that most of the time, it doesn't even look good in their commercials.

[pylon]

That, and they somehow figured out how to make sandwich bread that cuts your mouth.

[AcGold]

I once had a grilled cheese from Tim's, just about threw up on the first bite. The cheese tasted like mystery fluids and the ham tasted like it sat in a warm damp room for a few months.