Burger King to buy Canada's Tim Hortons for $11.5 billion

Tue Aug 26, 2014 11:03am EDT
 
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TORONTO Aug 26 (Reuters) - Burger King Worldwide Inc BKW.N announced plans to buy Canadian coffee and doughnut chain Tim Hortons Inc THI.TO for C$12.64 billion ($11.53 billion) in a cash-and-stock deal that would create the world's third-largest fast-food restaurant group.

With roughly $23 billion in combined annual sales, more than 18,000 restaurants in 100 countries and two strong, independent brands, the new entity would have an extensive global footprint and significant growth potential, the companies said in a joint statement on Tuesday.

The companies had said on Sunday that they were in merger talks, and shares of both soared on Monday.

Tim Hortons shareholders will receive C$65.50 in cash and 0.8025 shares of the new company for each of their shares. Based on Monday's close, the deal values Tim Hortons at C$94.05 a share, a 37 percent premium to Friday's close of C$68.78 on the Toronto Stock Exchange.

Tim Hortons' New York-listed shares rose 12 percent to $83.50 in premarket trading. Burger King was up 5 percent at $33.96.

Billionaire investor Warren Buffett's Berkshire Hathaway (BRKa.N: Quote) has committed $3 billion of preferred equity to finance the deal but will have no role in managing the business, the companies said.

3G Capital, a New York-based investment firm with Brazilian roots, owns roughly 70 percent of Burger King and is set to hold about 51 percent of the new combined company.

CANADIAN DOMICILE   Continued...

 
A Burger King logo is pictured in the Brooklyn borough of New York August 25, 2014. REUTERS/Carlo Allegri