An agreement was recently reached to create the world’s third largest quick service restaurant company. Tim Hortons Inc. and Burger King Worldwide Inc. announced a definitive agreement under which the two companies will create a new global powerhouse in the quick service restaurant sector.
With approximately $23 billion in system sales, over 18,000 restaurants in 100 countries and two independent brands, the new company will have an extensive international footprint and significant growth potential. 3G Capital will own roughly 51% of it which will be based in Canada, the largest market of the combined company.
Following the closing of the transaction, each brand will be managed independently, while benefitting from global scale and sharing of best practices that will come with common ownership by the new company.
Under the terms of the transaction, which has been unanimously approved by the Board of Directors of both companies, Tim Hortons shareholders will receive C$65.50 in cash and 0.8025 common shares of the new company per Tim Hortons share.
Based on Burger King’s unaffected closing stock price as of August 22, 2014, this represents total value per Tim Hortons share of C$89.32 and based on Burger King’s closing stock price as of August 25, 2014, this represents total value per Tim Hortons share of C$94.05.
As an alternative to the default mixed transaction consideration described above, each Tim Hortons shareholder will have the ability to elect to instead receive, for each Tim Hortons share held, either (i) C$88.50 in cash; or (ii) 3.0879 common shares of the new company, in each case subject to pro ration.
Marc Caira, President and CEO of Tim Hortons, said, “We are very proud of the great history of our organization and the progress we have achieved in creating value and delivering the ultimate experience for our guests.”
“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,” said Daniel Schwartz, CEO of Burger King.
Mr. Caira and Mr. Schwartz will continue as Tim Hortons and Burger King CEOs, respectively, through the transition period. Both Burger King and Tim Hortons will continue to operate after the closing as standalone, independent brands which leverage global shared services and best practices.
The current Tim Hortons headquarters in Oakville, Ontario will continue to be the global home of the Tim Hortons business. Burger King’s current headquarters in Miami, Florida will continue to be the global home of the Burger King business.
It is expected that the shares of the new parent company will be listed on the New York Stock Exchange and the Toronto Stock Exchange.