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.
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From the Burger King/Tim Horton’s prospectus: