World's Third Largest Quick Service Restaurant Company Launched with Two Iconic and Independent Brands: Tim Hortons and Burger
2014-08-26 11:30:57.427 GMT
World's Third Largest Quick Service Restaurant Company Launched with Two
Iconic and Independent Brands: Tim Hortons and Burger King
PR Newswire
OAKVILLE, ON and MIAMI, FL, Aug. 26, 2014
New Global Company Will Have Approximately $23 billion in System Sales and
Over 18,000 Restaurants in 100 Countries
Tim Hortons and Burger King to Operate as Independent Brands While Benefiting
From the New Company's Global Scale and Reach, and Shared Best Practices
Transaction Enables Tim Hortons and Burger King to Continue Growing their
Unique Brands and Significantly Accelerate International Expansion and Growth
3G Capital to own approximately 51% of new company
Oakville to remain global home of Tim Hortons; Miami to remain global home of
Burger King
Investment Community Conference Call at 10:00 am EDT; Media Conference Call at
11:30 am EDT
OAKVILLE, ON and MIAMI, FL, Aug. 26, 2014 /PRNewswire/ - An agreement was
reached today to create the world's third largest quick service restaurant
company. Tim Hortons Inc. (TSX, NYSE: THI) and Burger King Worldwide Inc.
(NYSE: BKW) today 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 strong, thriving, independent brands, the
new company will have an extensive international footprint and significant
growth potential. The new global company will be based in Canada, the largest
market of the combined company.
Tim Hortons and Burger King each have strong franchisee networks and iconic
brands that are loved by their guests. Following the closing of the
transaction, each brand will be managed independently, while benefitting from
global scale and reach 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.
The C$89.32 unaffected offer value represents a premium of 39% based on the
volume weighted average price of Tim Hortons stock over the past 30 days
ending Friday August 22, 2014, and a 30% premium based on Tim Hortons closing
stock price on August 22, 2014. By receiving shares in the new parent company,
Tim Hortons shareholders will have the opportunity to participate in the new
company's long-term value creation potential.
Alex Behring, Executive Chairman of Burger King and Managing Partner of 3G
Capital, said, "By bringing together our two iconic companies under common
ownership, we are creating a global QSR powerhouse. Our combined size,
international footprint and industry-leading growth trajectory will deliver
superb value and opportunity for both Burger King and Tim Hortons
shareholders, our dedicated employees, strong franchisees, and partners. We
have great respect for the Tim Hortons team and look forward to working
together to realize the full potential of these two extraordinary businesses."
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. As an
independent brand within the new company, this transaction will enable us to
move more quickly and efficiently to bring Tim Hortons iconic Canadian brand
to a new global customer base. At the same time, our customers, employees,
franchisees and fellow Canadians can all rest assured that Tim Hortons will
still be Tim Hortons following this transaction, including our core values,
employee and franchisee relationships, community support and fresh coffee."
"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. "We are excited to build on this progress as we continue to expand
Burger King around the world and look forward to working with and learning
from Tim Hortons as we together create the world's leading global restaurant
business."
Management and Governance
At the time of closing, Alex Behring, Executive Chairman of Burger King and
Managing Partner at 3G Capital, will lead the new global company as Executive
Chairman and Director. Marc Caira, President and CEO of Tim Hortons, will be
appointed Vice-Chairman and a Director, focused on overall group strategy and
global business development. Daniel Schwartz, CEO of Burger King, will become
Group CEO of the new company, with overall day-to-day management and
operational accountability. The new company's board will include the current
eight Burger King directors and three directors to be appointed by Tim
Hortons, including Mr. Caira.
Mr. Caira and Mr. Schwartz will continue as Tim Hortons and Burger King CEOs,
respectively, through the transition period, and additional executives in the
new global company structure will be identified from Burger King and Tim
Hortons during the transition period and announced at the time of closing.
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.
COMMITMENT TO CANADA
As part of its commitment to Canada, the new company will endorse the
following principles:
* Tim Hortons will continue to manage its own operations, headquartered in
Oakville, and continue its significant community involvement, including
the Tim Horton Children's Foundation, TimBits Minor Sports Program, Tim
Hortons Coffee Partnership and its community, sustainability and
charitable programs.
* This transaction will not change the way Tim Hortons works with its
franchisees or its business model. There are no plans to change the rents,
royalty structures, customer-facing programs, Franchise Advisory Board or
the franchisee-facing operational resources Tim Hortons provides to
support its franchisees in building their businesses.
* Likewise, there will be no changes to restaurant-level employment and the
new company will rely heavily on the Tim Hortons talent pool to staff the
new organization at all levels of responsibility. As a result, the global
company's management and shared services operations will consist of a
meaningful number of Canada-based executives.
Similarly, Burger King will continue to support and preserve its long-standing
commitment to local communities and charitable causes in the United States,
including the Burger King Scholars Program.
Long-term Ownership and Investing in Brands
3G Capital and its principals have a proven track record of investing in and
growing iconic brands. Over the years, it has partnered with other long-term
investors in previous transactions to build shareholder value and drive
innovation and growth in its companies.
3G Capital will retain all of its investment in Burger King by converting its
roughly 70% equity stake in Burger King into equity of the new company. On a
pro forma basis, 3G Capital is expected to own approximately 51% of the new
company with the balance of the common shares to be held by current public
shareholders of Burger King and Tim Hortons.
Financial Highlights
The combination generates substantial value for shareholders of both companies
and provides the opportunity for shareholders to participate in the new
company's long-term value creation potential. In addition to meaningful
revenue synergies created from accelerated international growth, the
transaction is expected to achieve cost savings through leveraging the new
company's global scale and the sharing and implementation of best practices.
Structure and Terms
Upon completion of the transaction, each outstanding common share of Tim
Hortons will be converted into the right to receive C$65.50 in cash and 0.8025
of a common share of the new parent company, which is subject to the right of
the holders of Tim Hortons common stock to make elections as noted above. Upon
completion of the transaction, each outstanding common share of Burger King
will be converted into 0.99 of a share of the parent company and 0.01 of a
unit of a newly formed Ontario limited partnership controlled by the new
parent company, however, holders of shares of Burger King common stock will be
given the right to elect to receive only partnership units in lieu of common
shares of the new parent company, subject to a limit on the maximum number of
partnership units that can be issued.
Shares of the new parent company will be traded on the New York Stock Exchange
and the Toronto Stock Exchange and units of the new partnership will be traded
on the Toronto Stock Exchange. The partnership units will be convertible on a
1:1 basis into common shares of the new parent company, however, the units may
not be exchanged for common shares for the first year following the closing of
the transaction. Holders of partnership units will participate in the votes
of shareholders of the new parent company on a pro-rata basis as though the
units had been converted. 3G Capital has committed to elect to receive only
partnership units.
The transaction is expected to be taxable, for U.S. federal income tax
purposes, to the shareholders of Burger King, other than with respect to the
partnership units received by them in the transaction. The transaction is
expected to be taxable to shareholders of Tim Hortons in the U.S and Canada.
Burger King has obtained commitments for $12.5 billion of financing to fund
the cash portion of the transaction, including commitments for a $9.5 billion
debt financing package led by JP Morgan and Wells Fargo. The obligation of JP
Morgan and Wells Fargo to provide this committed debt financing is subject to
a number of customary conditions, including execution and delivery of certain
definitive documentation. It is expected that the debt financing for the
transaction will consist of a $6.75 billion senior secured term loan B
facility, a $500 million senior secured revolving credit facility and senior
secured second-lien notes in the amount of $2.25 billion.
Berkshire Hathaway has committed $3 billion of preferred equity financing.
Berkshire is simply a financing source and will not have any participation in
the management and operation of the business.
The transaction is subject to customary closing conditions, including approval
of Tim Hortons shareholders and receipt of certain antitrust and regulatory
approvals in Canada and the U.S. Since 3G Capital already owns approximately
70% of the shares of Burger King and has committed to vote in favor of the
combination, no shareholder vote is required of Burger King shareholders.
Further information regarding the transaction will be included in a joint
information circular/statement to be mailed to the shareholders of both Tim
Hortons and Burger King. The Arrangement Agreement and Plan of Merger
provides that Tim Hortons is subject to customary non-solicitation provisions.
Both companies' boards of directors have unanimously determined that the
proposed combination is in the best interests of their respective companies.
Each of RBC Capital Markets and Citi has delivered a fairness opinion to the
board of directors of Tim Hortons, and Lazard has delivered a fairness opinion
to the board of directors of Burger King.
Advisors
Lazard, J.P. Morgan and Wells Fargo served as financial advisors to Burger
King. Kirkland & Ellis LLP, Davies Ward Phillips & Vineberg LLP and Paul,
Weiss, Rifkind, Wharton & Garrison LLP served as legal counsel to Burger King.
Citi and RBC Capital Markets are serving as financial advisors to Tim Hortons.
Wachtell, Lipton, Rosen & Katz and Osler, Hoskin & Harcourt LLP are serving as
legal counsel to Tim Hortons.
Investor Conference Call Details
Tim Hortons and Burger King will host a joint investment community conference
call today at 10:00 a.m. EDT. Callers are advised to dial in 10 minutes prior
to the start time. Media is welcome to listen to the call, but questions will
be restricted to the investment community. A separate call for media will be
held at 11:30 a.m. EDT; please see dial-in details below.
Participant Local and International Dial-in Number(s): 647-427-7450
Participant North American Toll Free Number: 1-888-231-8191
Webcast URL (EN):
http://event.on24.com/r.htm?e=843147&s=1&k=0FAA732A9ECD0CF41B0ABF95A44AB7C8 A replay of the call will be available for one week:
Encore Toll Free Dial-in Number: 1-855-859-2056
Encore Password: 93948299
Media Conference Call Details
Tim Hortons and Burger King will host a joint media conference call today at
11:30 a.m. Callers are advised to dial in 10 minutes prior to the start time.
Participant Local and International Dial-in Number(s): 647-427-7450
Participant North American Toll Free Number: 1-888-231-8191
A replay of the call will be available for one week:
Encore Toll Free Dial-in Number: 1.855.859.2056
Encore Password: 93965390
Tim Hortons Inc. Overview
Tim Hortons is one of the largest publicly-traded restaurant chains in North
America based on market capitalization, and the largest in Canada. Operating
in the quick service segment of the restaurant industry, Tim Hortons appeals
to a broad range of consumer tastes, with a menu that includes premium coffee,
hot and cold specialty drinks (including lattes, cappuccinos and espresso
shots), specialty teas and fruit smoothies, fresh baked goods, grilled Panini
and classic sandwiches, wraps, soups, prepared foods and other food products.
As of June 29, 2014, Tim Hortons had 4,546 systemwide restaurants, including
3,630 in Canada, 866 in the United States and 50 in the Gulf Cooperation
Council. More information about the Company is available at
www.timhortons.com.
About Burger King Worldwide
Founded in 1954, BURGER KING® (NYSE: BKW) is the second largest fast food
hamburger chain in the world. The original HOME OF THE WHOPPER®, the BURGER
KING® system operates in approximately 14,000 locations serving more than 11
million guests daily in 98 countries and territories worldwide. Approximately
100 percent of BURGER KING® restaurants are owned and operated by independent
franchisees, many of them family-owned operations that have been in business
for decades. To learn more about Burger King Worldwide, please visit the
company's website at www.bk.com or follow us on Facebook and Twitter.
Forward-Looking Statements
This press release includes forward-looking statements, which are often
identified by the words "may," "might," "believes," "thinks," "anticipates,"
"plans," "expects," "intends" or similar expressions and include statements
regarding (1) expectations regarding whether a transaction will be
consummated, including whether conditions to the consummation of the
transactions will be satisfied, or the timing for completing the transaction,
(2) expectations for the effects of the transaction or the ability of the new
company to successfully achieve business objectives, including integrating the
companies or the effects of unexpected costs, liabilities or delays, and (3)
expectations for other economic, business, and/or competitive factors. Other
unknown or unpredictable factors could also have material adverse effects on
future results, performance or achievements of the combined company. These
forward-looking statements may be affected by risks and uncertainties in the
business of Burger King and Tim Hortons and market conditions. This
information is qualified in its entirety by cautionary statements and risk
factor disclosure contained in filings made by Burger King and Tim Hortons
with the U.S. Securities and Exchange Commission, including Burger King's
annual report on Form 10-K for the year ended December 31, 2013 and Tim
Hortons annual report on Form 10-K for the year ended December 29, 2013. Both
Burger King and Tim Hortons wish to caution readers that certain important
factors may have affected and could in the future affect their actual results
and could cause their actual results for subsequent periods to differ
materially from those expressed in any forward-looking statement made by or on
behalf of Burger King or Tim Hortons. Neither Burger King nor Tim Hortons
undertakes any obligation to update forward-looking statements to reflect
events or circumstances after the date hereof.
Additional Information and Where to Find It
This communication does not constitute an offer to sell or the solicitation of
an offer to buy any securities, or a solicitation of any vote or approval, nor
shall there be any sale of securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or qualification
under the securities laws of any such jurisdiction. In connection with the
transaction, the proposed new parent company resulting from the transaction
intends to file with the SEC a registration statement on Form S-4 that will
include a joint information statement/circular and other relevant documents to
be mailed by Tim Hortons and Burger King to their respective security holders
in connection with the proposed transaction of Tim Hortons and Burger King.
The joint information statement/circular will also be filed with the Canadian
securities regulators. WE URGE INVESTORS AND SECURITY HOLDERS TO READ THE
JOINT INFORMATION STATEMENT/CIRCULAR AND ANY OTHER RELEVANT DOCUMENTS WHEN
THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION about
Tim Hortons, Burger King and the proposed transaction. Investors and security
holders will be able to obtain these materials (when they are available) and
other documents filed with the SEC and the Canadian securities regulators free
of charge at the SEC's website, www.sec.gov and at the System for Electronic
Document Analysis and Retrieval (SEDAR) at www.sedar.com. In addition, a
copy of the joint information statement/circular (when it becomes available)
may be obtained free of charge from Tim Hortons' internet website for
investors www.timhortons-invest.com, or from Burger King's investor relations
website at http://investor.bk.com. Investors and security holders may also
read and copy any reports, statements and other information filed by Tim
Hortons or Burger King, with the SEC, at the SEC public reference room at 100
F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330
or visit the SEC's website for further information on its public reference
room.
Participants in the Solicitation of Votes
Tim Hortons, Burger King, and their respective directors, executive officers
and certain other members of management and employees may be deemed to be
participants in the solicitation of proxies in respect of the proposed
transaction. Information regarding Tim Hortons' directors and executive
officers is available in its management proxy circular filed by Tim Hortons on
the System for Electronic Document Analysis Retrieval ("SEDAR") website
maintained by the Canadian Securities Administrators at http://www.sedar.com
on March 21, 2014 in connection with its 2014 annual meeting of shareholders,
and information regarding Burger King's directors and executive officers is
available in its proxy statement filed with the SEC by Burger King on April 2,
2014 in connection with its 2014 annual meeting of shareholders. Other
information regarding the participants in the proxy solicitation and a
description of their direct and indirect interests, by security holdings or
otherwise, will be contained in the joint information statement/circular and
other relevant materials to be filed with the SEC and the Canadian securities
regulators when they become available.
SOURCE Tim Hortons
Contact:
Tim Hortons Inc.
Media & Investor Contact
Scott Bonikowsky
SVP, Corporate, Public & Government Affairs
(905) 339-6186
bonikowsky_scott@timhortons.com
Burger King Worldwide
Media
Brunswick Group
Steve Lipin / Radina Russell
(212) 333.3810
Miguel Piedra
Mediainquiries@whopper.com
(305) 378-7277
Investors
Sami Siddiqui, Investor Relations
(305) 378-7696; investor@whopper.com
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