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    Burger King & Tim Hortons Merger Is Official

    Deal creates the world's third-largest QSR.

    Tim Hortons posted this image to its Facebook page, reassuring fans its products will stay the same.

    MIAMI-- Two days after declining to comment any further until a deal was done, Burger King Worldwide Inc. and Tim Hortons Inc. have made it official.

    Miami-based Burger King and Ontario, Canada-based Tim Hortons reached a definitive agreement to merge, creating the world’s third-largest quick-service restaurant (QSR). The new global company will be based in Canada, the largest market of the combined company.

    The deal is valued at approximately $11 million, according to The Associated Press.

    According to a joint news release, the combined company will boast approximately $23 billion in system sales, more than 18,000 restaurants in 100 countries and two independent brands.

    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.

    "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," said Alex Behring, executive chairman of Burger King and managing partner of 3G Capital. "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."

    3G Capital, the majority owner of Burger King, will continue to own the majority of the shares -- approximately 51 percent -- of the new company on a pro-forma basis, with the remainder held by existing Tim Hortons and Burger King shareholders.

    "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," said Marc Caira, president and CEO of Tim Hortons. "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."

    The board of directors of both companies unanimously approved the deal.

    "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 Structure

    At the time of closing, Behring will lead the new global company as executive chairman and director. Caira will be appointed vice-chairman and a director, focused on overall group strategy and global business development. Schwartz 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.

    Caira and 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 by Burger King and Tim Hortons during the transition period and announced at the time of closing.

    The current Tim Hortons headquarters in Oakville, Ont., will continue to be the global home of the Tim Hortons business. Burger King’s current headquarters in Miami 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.

    Financial Highlights

    Under the deal, Burger King will pay $65.50 Canadian (U.S. $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 (U.S. $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, according to the Associated Press.

    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. Berkshire Hathaway has committed $3 billion of preferred equity financing. 

    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 United States. 3G Capital, which owns approximately 70 percent of the shares of Burger King, has committed to vote in favor of the combination so no shareholder vote is required of Burger King shareholders.

    Tim Hortons is one of the largest publicly traded restaurant chains in North America based on market capitalization, and the largest in Canada. The chain appeals to a broad range of consumer tastes with a menu that includes premium coffee, hot and cold specialty drinks, specialty teas and fruit smoothies, fresh-baked goods, grilled Panini and classic sandwiches, wraps, soups, prepared foods and other food products.

    Tim Hortons has 4,546 system-wide restaurants, including 3,630 in Canada, 866 in the U.S. and 50 in the Gulf Cooperation Council.

    Burger King is the second-largest fast-food hamburger chain in the world. It operates approximately 14,000 locations in 98 countries and territories worldwide. Approximately 100 percent of Burger King restaurants are owned and operated by independent franchisees.

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