Tim Hortons agrees to Burger King offer for $94 a share
Tim Hortons has agreed to be bought by the company that owns Burger King in a deal that could culminate in the world's third largest fast-food company
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.
That would bring the cash value of the deal for current Tim Hortons owners to more than $94 per share. That's 39 per cent higher than the average price Tim Hortons shares have traded at during the month leading up to last weekend, when rumours of a deal emerged.
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The new company would have combined global sales of $23 billion and have 18,000 locations in 98 countries.
The boards of both companies have unanimously approved the transaction. Two-thirds of Burger King is owned by 3G, so the deal has been consummated on that end, but Tim Hortons shareholders still have to approve it.
Regulators in the U.S. and Canada will also likely want a say.
The two companies will hold a news conference at 11 a.m. on Tuesday to discuss the deal with analysts and the media.
After gaining 20 per cent Monday, when the two companies confirmed they were in talks, Tim Hortons shares gained another 10 per cent in premarket trading on Tuesday following word of a concrete offer.
Shares in the new company will list both on the TSX and NYSE. 3G capital will still own a controlling interest, 51 per cent, of the new company.
Daniel Schwartz, CEO of Burger King, would also become CEO of the new company. Current Tim Hortons CEO Marc Caira would become a director of the new company, as well as its vice-chairman.
The new company's board would include the current eight Burger King directors and three directors to be appointed by Tim Hortons, including Caira.
Warren Buffett's company Berkshire Hathaway is helping finance the deal with $3 billion of preferred equity financing, but will not have a role in managing operations.