The companies that I will be looking at for my merger or acquisition paper would involve Burger king and Tim Hortons. In this paper I will be talking about Burger King acquiring Tim Hortons and will include a summary of each company and stating the terms of the Merger/ acquisition. There is also a few other topics that will be discussed, which will include but is not limited to; how the transaction was accomplished, changes in management that were made, any goodwill involved and my opinion regarding the Merger/ Acquisition. To start I will first inform you about each party involved in this transaction.
Burger King dates back more than a half-century ago, and was founded in 1954 by James MClamore and David Edgerton. They opened the first Burger King in Miami, Florida and soon after acquired national and international franchising rights of their Burger King brand. They are also known by many for their burger called the Whopper®, which had instant success and lead the founders to develop the “Burger King, HOME OF THE WHOPPER®” campaign in 1958. It is history from there on out and since have hit many milestones along the way, like the debut of the “HAVE IT YOUR WAY®” campaign in 1974, The introduction of the Drive-thru service in the United States and opening their first European store in Madrid, Spain in 1975. In 1988, Grand Metropolitan PLC acquired Pillsbury Company and its subsidiaries, including Burger King, for $5.8 billion. Burger King had a renewed focus, after this acquisition, on international growth, setting up shop in key countries like East Germany, Poland, Israel, Italy, etc. In 1997, Grand Metropolitan essentially dropped Burger King and Pillsbury Company all together after merging with Guinness to create Diageo PLC. Fast forwarding to 2006 Burger King Holdings completed a successful initial public offering, and listed its stock on the New York Stock Exchange. In 2010 3G Capital acquired Burger King Holdings and retains roughly 70% ownership of the company. (Burger King, 2012). Tim Hortons Inc. is a Canadian multinational casual restaurant that serves coffee and doughnuts. It is also the largest quick service restaurant chain in Canada, with many restaurants in Canada, the United States, and the Persian Gulf region. It was founded in 1964 in Hamilton, Ontario, by Canadian Hockey player Tim Horton and Jim Charade, after its initial push for a hamburger restaurant. In 1967, Horton partnered with investor Ron Joyce, who later assumed control of Tim Hortons after Horton died in 1974. Joyce expanded the chain into a multimillion dollar franchise. It spread rapidly and overtook McDonalds as Canada’s largest food service operator as of 2002. Tim Hortons commands 76% of the Canadian market for baked goods and 62% of the Canadian coffee market. Going back in time, in 1995 Wendys attempted to merge with Tim Hortons but eventually split in the early 2000s and Tim Hortons regained its independence. That is where Burger King comes into play with their acquisition with Tim Hortons in 2014. (Tim Hortons, 2014).
This deal between Burger King and Tim Hortons, which Warren Buffett is in the middle of, will be an acquisition in which Burger King will buy Tim Hortons. In this situation the big fish is going to be Burger King and the little fish will be Tim Hortons. Burger King will not be taking over Tim Hortons fully and getting rid of their brand name because of the trademark that they have made for themselves. They are a well-known company in Canada and are one of the biggest coffee and donut shops in Canada. It would be to Burger Kings advantage to keep the name and keep all of the loyal customers that Tim Hortons already has. This will make it so they don’t have to start from scratch in the Canadian market.
Burger King is going to be buying Tim Hortons for $11.4 billion (U.S). When looking at the final price though, you can only wonder how much of that the goodwill is. When looking for this on the ‘Arrangement Resolution