Date
23 October 2017
Warren Buffett's Berkshire Hathaway has committed US$3 billion of preferred equity for 3G Capital, which controls Burger King, to buy Tim Hortons. Photo: Reuters
Warren Buffett's Berkshire Hathaway has committed US$3 billion of preferred equity for 3G Capital, which controls Burger King, to buy Tim Hortons. Photo: Reuters

Buffett puts shareholders first in Burger King deal

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.

So Buffett’s participation in fast-food chain Burger King Worldwide’s purchase of coffee and doughnut chain Tim Hortons – 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 US tax bill. 

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 US.

“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. “Investing in America is actually the outcome of his analysis instead of the beginning assumption.”

Buffett’s Berkshire Hathaway has committed US$3 billion of preferred equity for 3G Capital, which controls Burger King, to buy Tim Hortons in a deal worth almost US$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.

Buffett tried to explain the reasons for the move to Canada in comments to the Financial Times. “Tim Hortons earns more money than Burger King does,” he told the paper. “I just don’t know how the Canadians would feel about Tim Hortons moving to Florida. The main thing here is to make the Canadians happy.”

– contact us at [email protected]

JL

EJI Weekly Newsletter

Please click here to unsubscribe