DEALTALK-Buffett puts shareholders ahead of patriotism in Canadian deal

Tue Aug 26, 2014 7:05pm EDT
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By Luciana Lopez

NEW YORK Aug 26 (Reuters) - Warren Buffett may be most famous for the billions of dollars he has made from investing but he is also well known as a cheerleader for the United States. The Oracle of Omaha routinely exhorts investors to put their money in America, "the mother lode of opportunity," as he wrote in his annual letter this year.

So Buffett's participation in fast-food chain Burger King Worldwide Inc's purchase of coffee and doughnut chain Tim Hortons Inc - complete with relocation of Burger King's domicile to Canada - might at first blush raise questions about his patriotism.

Investors and tax experts say Miami-based Burger King's move to Canada through a so-called tax inversion will help curb its U.S. tax bill. Similar recent moves by other U.S. companies - mainly through the purchase of European companies - have drawn the ire of President Barack Obama, who suggested they are corporate deserters lacking economic patriotism.

But analysts and investors say that the Burger King deal underlines the market savvy that's helped him build his fortune more than prompting questions about his commitment to the U.S.

"When Warren Buffett advocates investing in America, as I understand it, that's because that's where the opportunities largely lie," said Meyer Shields, managing director at investment bank Keefe, Bruyette & Woods Inc. "Investing in America is actually the outcome of his analysis instead of the beginning assumption."

Buffett's Berkshire Hathaway has committed $3 billion of preferred equity for 3G Capital, which controls Burger King, to buy Tim Hortons in a deal worth almost $12 billion. That should give him a juicy return and a stake in any increase in value of the combined entity.

Berkshire, a sprawling conglomerate with more than 80 companies and a wide-ranging stock portfolio, will have no role in operating the new entity.   Continued...