MIAMI — The fight for the coffee and breakfast crowd is heating up, both at home and abroad.
Burger King said Tuesday it will buy Tim Hortons in an $11 billion deal that would create the world’s third largest fast-food chain. The company is hoping to turn the coffee-and-doughnut chain into a household name outside Canada.
Alex Behring, Burger King’s executive chairman, said the new company would be one of the fastest-growing fast-food chains in the world.
The international ambitions for Tim Hortons echo the strategy Burger King’s owner, 3G Capital, has applied to Burger King since buying the hamburger chain in 2010. Given Burger King’s struggles in the U.S., the investment firm has focused on opening more locations in countries including China and Russia by striking deals with local franchisees.
After the deal, which is expected to close by early next year, Burger King and Tim Horton said their newly combined company would have about $23 billion in sales and more than 18,000 locations. The corporate headquarters will be in Canada, but Burger King will still be operated out of Miami.
Burger King executives also stressed the deal wasn’t being driven by a desire for lower tax rates: Schwartz said the company doesn’t expect to achieve any “meaningful tax savings.”
3G Capital will own about 51 percent of the new company. Last year, the firm also teamed up with Warren Buffett’s Berkshire Hathaway to buy ketchup maker H.J. Heinz Co.
Berkshire Hathaway is also helping finance the Tim Hortons deal with $3 billion of preferred equity financing, but will not have a role in managing operations.
Under the deal, Burger King will pay $65.50 Canadian ($59.74) in cash and 0.8025 common shares of the new company for each Tim Hortons share. This represents total value per Tim Hortons share of $94.05 Canadian (US$85.79), based on Burger King’s Monday closing stock price. Alternatively, Tim Hortons shareholders may choose either all-cash or all stock in the new company.
Tim Hortons stock was up nearly 9 percent at $81.25. Burger King’s shares were down 2 percent to $31.63.