By Dr. David Kass PhD, Harvard University

When Burger King’s (BKW)  acquisition of Tim Horton’s (THI) closes on December 12, Berkshire Hathaway (BRK.A, BRK.B) will purchase $3 billion of 9% preferred shares and receive a warrant to purchase 1.75% of the common shares of the combined company at an exercise price of $0.01 per common share.  Berkshire has informed Burger King that it intends to exercise the warrant promptly following the closing of the transaction.  Berkshire will then own 8.4 million shares with a current market value of about $300 million.

 

From the Burger King/Tim Horton’s prospectus:

“In connection with the transactions,
Berkshire Hathaway Inc. (“Berkshire”) will purchase for an aggregate purchase price of $3,000,000,000 (USD),
(a) Class A 9% cumulative compounding perpetual voting preferred shares of Holdings (the “preferred shares”) and
(b) a warrant to purchase Holdings common shares (the “warrant”), which shares issuable pursuant to the warrant
will represent 1.75% of the fully diluted common shares of Holdings as of the completion of the transactions, at an
exercise price per Holdings common share of $0.01. The warrant may be exercised until the fifth anniversary of the
closing of the transactions. Berkshire has informed Holdings that it intends to exercise the warrant promptly
following the closing of the transactions.”

 

http://www.omaha.com/money/berkshire-hathaway-gets-percent-interest-stock-in-burger-king-tim/article_410c071e-3db5-11e4-93f8-0017a43b2370.html

http://online.wsj.com/articles/burger-king-nears-closing-tim-hortons-acquisition-1417785495?

Berkshire Hathaway to Own 1.75% of Burger King/Tim Horton’s on December 12