MIAMI—Burger King Worldwide and Tim Hortons Inc. have made it official, announcing Tuesday that the Miami-based burger chain had agreed to buy the donut maker in a stock-and-cash deal worth $11.4 billion. The 60-year-old Burger King will remain headquartered in Miami, although the holding company for both brands will be based in Canada, where Tim Hortons is located.
Although the bulk of the financing for the acquisition will come from a $9.5-billion debt financing package led by JP Morgan and Wells Fargo, Warren Buffet‘s Berkshire Hathaway is committing $3 billion of preferred equity. Berkshire will only be a funding source and will play no role in management or operations of the new company, which among other things will seek to roll out the Tim Hortons format, largely concentrated in Canada, to a global customer base. The two brands will be managed independently.
3G Capital, which currently controls 70% of Burger King equity, will have an approximately 51% stake in the new company, which will be the third largest in the quick-service restaurant sector. Shares of the new parent company are expected to be listed on the New York and Toronto stock exchanges.
When the deal closes, Alex Behring, executive chairman of Burger King and managing partner at 3G Capital, will lead the new global company as executive chairman and director. Burger King CEO Daniel Schwartz will become group CEO, while Tim Hortons’ president and CEO, Marc Caira, will be appointed vicec hairman and a director. The new company’s board will include the current eight Burger King directors and three directors to be appointed by Tim Hortons, including Caira.
“Over the past four years, we have transformed Burger King into one of the fastest-growing and most profitable QSR businesses in the world, through successful international growth, a consistent focus on brand revitalization and strong commitment to our franchisees,” says Schwartz. “We are excited to build on this progress as we continue to expand Burger King around the world and look forward to working with and learning from Tim Hortons as we together create the world’s leading global restaurant business.”
Tuesday’s announcement occurs about 36 hours after the two companies issued a joint statement confirming that they were in negotiations for a merger. It’s being structured as a tax inversion to take advantage of Canada’s lower corporate tax rate; Tim Hortons is headquartered in Oakville, Ont.