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A CASE STUDY ON BURGER KING AND TIM HORTONS DEAL

Completed By:-

Aakash Bhatia

Mounika Gaggara

Subramanya Karra for Michael Ackerbauer

SUMMARY 

Miami based Burger King has confirmed plans to acquire Ontario-based doughnuts-and-coffee chain Tim Hortons for about $11 billion, creating a new company to be based in Canada-which is Tim Hortons largest market with combined sales of $23 billion. This deal is assisted by American billionaire Warren E. Buffett’s company - Berkshire Hathaway, who is providing $3 Billion of the total deal by taking preferred shares in the combined company, including $9.5 billion from a debt package led by JPMorgan Chase & Co. and Wells Fargo & Co (BKPressRelease). Brazil-based global investment firm 3G Capital will own approximately 51% of the new combined company. Current CEO of Burger King - Daniel Schwartz, would become CEO of the new company and current Tim Hortons CEO Marc Caira would become a director of the new company, as well as its vice-chairman. Their intention is to become one of the world’s largest fast food chains whose offerings span from breakfast to dinner at over 18,000 locations in 100 countries, but still continue to operate as standalone brands. This news sent both companies stocks gaining a new high. Shares of Tim Hortons rose 19.26% to close at $82.03 on the Toronto Stock Exchange while Burger King’s shares rose 19.51% to US$32.40 on Aug 25, 2014 (CNNMoney). Canada’s Competition Bureau has approved Burger King’s plan to buy Tim Hortons Inc. on Oct 28, 2014 and The Canadian government will decide before Dec. 25 as it had asked the companies for a 30-day extension on the review, beyond the initial 45-day review period as told by Canadian Industry Minister James Moore.

 PROBLEM 

The problem with Burger King was that, it had been reporting rather unimpressive results for the last couple of...