Berkshire Hathaway Announces 4.18% Ownership Of Restaurant Brands International

Berkshire Hathaway B shares Warren BuffettBy Mark Hirschey (Work of Mark Hirschey) [CC BY-SA 2.0], via Wikimedia Commons

Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B) announced Friday its acquisition of ownership and control of over 4.18% of the outstanding Common Shares and 14.37% of the total number of votes attached to all outstanding voting shares of Restaurant Brands International Inc. (NYSE:QSR).

Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B) acquired the securities through its wholly owned subsidiary National Indemnity Company.

Burger King’s acquisition of Tim Hortons

Last week, Tim Hortons Inc. shareholders approved the sale of the doughnut chain to Burger King Worldwide Inc (NYSE:BKW) for about $1 billion. This paved the way for the creation of the world’s third-largest fast food company.

As reported by ValueWalk, Burger King Worldwide Inc. raised its offer price to Tim Hortons’ Inc. executives three times before the coffee chain’s board decided to enter into takeover discussions with the fast food giant. Regulatory filings revealed that Burger King’s final offer of $88.50 was accepted only after its executives made a number of key promises to the Canadian restaurant company aimed at maintaining the heritage of the Oakville, Ont.-based brand and furthering its international expansion efforts.

ValueWalk reported that when Burger King Worldwide Inc (NYSE:BKW)’s acquisition of Tim Horton’s is finalized on December 12, Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B) would 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.

Warren Buffet’s Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B) had informed Burger King Worldwide Inc (NYSE:BKW) that it intends to exercise the warrant promptly following the closing of the transaction. It was also reported that the new company will be named Restaurant Brands International, have a ticker symbol of QSR, and trade on the New York Stock Exchange.

Berkshire Hathaway completes investment

In its press release Friday, Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B) announced that the acquisition of securities in Restaurant Brands International was completed pursuant to the terms of a securities purchase agreement dated August 26, 2014 between Restaurant Brands and Berkshire. Warren Buffet’s Berkshire also added that the securities were acquired in connection with the closing of the transaction that was initially announced on August 26, 2014 by Tim Hortons Inc. and Burger King Worldwide Inc (NYSE:BKW).

Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B)’s acquisition of the Class A Preferred Shares in Restaurant Brands International Inc. (NYSE:QSR) represent 100% of the outstanding Class A Preferred shares and roughly 13% of the total number of votes attached to all outstanding voting shares of Restaurant Brands. Its investment in warrants represents 1.75% of the fully exchanged and fully diluted Commons shares of Restaurant Brands. The press release also elaborated that the securities in Restaurant Brands International were acquired for an aggregate purchase price of US $3,000,000,000  and that the securities were acquired for investment purposes and Berkshire intends to cause NICO to exercise the Warrants, and Berkshire may enhance or prune its beneficial ownership, control depending on Restaurant’s business and financial condition.

Interestingly, Berkshire also acquired one warrant to purchase 8,438,225 common shares in the capital of Restaurant Brands at an exercise price of US $0.01 per share.

Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B)’s “penny” warrants are atypical compared to its financing in recent years of Goldman Sachs Group Inc (NYSE:GS), General Electric Company (NYSE:GE), Dow Chemical Co (NYSE:DOW), and Bank of America Corp (NYSE:BAC).  In each of the latter deals, Berkshire either waited several years (GS and GE) to convert its warrants or has not yet converted (DOW and BAC).

About the Author

Mani is a Senior Financial Consultant. He has worked in Senior Management role in large banking, financial and information technology organizations. He has provided solutions for major banking and securities firms across the globe in the area of retail, corporate and investment banking. He holds MBA (Finance) and Professional Management Accounting Qualifications. His hobbies are tracking global financial developments and watching sports