WSJ: Buffett To Help Finance Burger King's Acquisition Of Tim Hortons

(RTTNews) - Billionaire investor Warren Buffett will help to finance Burger King Worldwide Inc.'s (BKW) planned acquisition of Canadian quick-service restaurant chain Tim Hortons, Inc. (THI, THI.TO), the Wall Street Journal reported Monday, citing people familiar with the matter.

According to the WSJ report, Buffett will invest in the deal in the form of preferred shares and is expected to provide about 25 percent of the deal's financing. However, the exact structure of Buffett's participation in the deal is reportedly unclear and talks are ongoing.

Following media reports, Burger King Worldwide confirmed last Sunday that it is in talks to acquire Tim Hortons to create a combined entity that will be publicly-listed and headquartered in Canada. The deal will help Burger King to shift base to Canada and save it from paying high U.S. corporate taxes.

The potential deal between Burger King and coffee and doughnut chain Tim Hortons would be structured as a so-called "tax inversion" deal. The combined entity would be the world's third-largest quick service restaurant company, with about $22 billion in system sales and over 18,000 restaurants in 100 countries worldwide.

Such tax inversion deals are currently increasingly common among U.S. healthcare companies as the U.S. overhauls its healthcare system under the Affordable Care Act.

The potential deal will see private equity firm 3G Capital Management continue to hold a majority stake in the combined entity on a pro forma basis, with the remaining stake to be held by existing shareholders of Burger King and Tim Hortons. The two brands will also operate on a stand-alone basis in order to preserve the strong relationship that consumers have with these iconic brands.

According to the WSJ report, the deal by Buffett would mark another instance of Berkshire teaming up with Burger King's controlling shareholder, 3G Capital Management. Buffett and 3G Capital partnered in 2013 to take over ketchup maker H.J. Heinz & Co. for $23 billion.

BKW closed Monday's regular trading session at $32.40, up $5.29 or 19.51 percent on a volume of 21.60 million shares. In after-hours, the stock is further up $0.14 or 0.43 percent to $32.54.