UPDATE 3-Burger King to buy Canada's Tim Hortons for $11.5 billion

Tue Aug 26, 2014 11:18am EDT
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(Adds investor comments, details on deal, background; updates share price move)

By Euan Rocha and Solarina Ho

TORONTO Aug 26 (Reuters) - Burger King Worldwide Inc plans to buy Canadian coffee and doughnut chain Tim Hortons Inc in a C$12.64 billion ($11.53 billion) cash-and-stock deal that would create the world's third-largest fast-food restaurant group.

With roughly $23 billion in combined annual sales and more than 18,000 restaurants in 100 countries, the new entity would have a vast global footprint and huge growth potential, the companies said in a joint statement on Tuesday.

The deal is not expected to run into any antitrust hurdles, given the different fast-food segments the two companies serve, but it is expected to generate some anger in the United States because of Burger King's plan to move the combined entity to Canada.

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

The deal values Tim Hortons at C$94.05 a share, a 37 percent premium to Friday's close of C$68.78 in Toronto.

Tim Hortons' Toronto-listed shares were up 8.8 percent at C$89.29 in morning trading, while Burger King fell 2.5 percent to $31.58 in New York.

"I think C$94 is pretty rich," said David Baskin, president of Baskin Financial Services, which controls about 180,000 shares in Tim Hortons. "We were hoping for C$90, but at C$94, I can't imagine anybody not tendering."   Continued...