A recent article in the Toronto Globe and Mail by journalists Boyd Erman And Marina Strauss, provides a slew of new details on the recent Burger King Worldwide Inc (NYSE:BKW) – Tim Hortons Inc. (NYSE:THI) (TSE:THI) deal. The information in the article was research was derived rom the legal and regulatory filings relating to the merger. Of note, the entire string of events was kicked of by Warren Buffett‘s agreeing to back Burger King with financing for the acquisition of Tim Horton’s.
Buffett’s blessing for the deal led to months of intensive negotiations that saw Burger King Worldwide Inc (NYSE:BKW) increase its bid three times and agree to demands from Tim Hortons Inc. (NYSE:THI) (TSE:THI) for significant protection of its Canadian business interests.
It all started with Buffett
According to the Globe and Mail article, Burger King’s pursuit of Tim Hortons started all the way back in March with a conversation between some senior investment bankers and Warren Buffett, in which the Omaha billionaire agreed to provide funds to support a takeover.
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Burger-King Tim Hortons deal timeline
Tim Hortons CEO Mark Caira received a phone call on March 12th from a senior banker involved in the deal informing him that 3G Capital, the majority owner of Burger King Worldwide Inc (NYSE:BKW), wanted to discuss a deal to acquire Tim Hortons Inc. (NYSE:THI) (TSE:THI) . Caira agreed to a meeting with Burger King’s chairman, 3G exec Alexandre Behring.
Caira and Mr. Behring met for dinner in Toronto, but the discussion was kept in a general level. Caira did, however, make it clear that Burger King should make an offer.
“Mr. Caira informed Mr. Behring that Tim Hortons was not for sale, but that he would inform the Tim Hortons board of directors of Burger King Worldwide’s and 3G Capital’s interest and indicated that any specific proposal should be communicated in writing,” the companies noted in an SEC filing.
The opening bid was $73 a share, delivered to Tim Hortons on March 24 in a joint letter from 3G, Burger King and Buffett’s Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B).
Two months later, Burger King upped the offer to $78 a share. Tims argued that was still not enough, and that its strategic plan would take the share price to well north of that number. Then, on June 27, Burger King raised its bid again to $82.50. Caira remained adamant that the company was worth more.
After a six-week stalemate, Caira told Burger King Worldwide Inc (NYSE:BKW) it “would have to improve the price and terms of its proposal and clarify or provide additional detail about the commitments it was prepared to make in respect of other stakeholders, including those it was prepared to make to demonstrate its commitment to the franchisees, employees, guests, communities and Canada, as previously had been discussed in more general terms in its proposal.”
Burker King was the first to blink. On August 15, they bumped up the price again to $88.50, and Tim Hortons Inc. (NYSE:THI) (TSE:THI) agreed to go ahead with discussions on finalizing a deal.