Restaurant Brands International

Restaurant Brands International, Inc.
Public
Traded as
Industry Restaurants
Founded December 15, 2014 (2014-12-15)
Headquarters Oakville, Ontario, Canada
Number of locations
 19,735 (September 30, 2016)[1]
Areas served
 Global
Key people
 Alex Behring
(Executive Chairman)
Marc Caira
(Vice-Chairman)
Daniel Schwartz
(CEO)
Owner

3G Capital

Berkshire Hathaway
Number of employees
 450,000+
Subsidiaries Burger King
Tim Hortons
Website www.rbi.com

Restaurant Brands International is a Canadian multinational fast food company. Formed by the $12.5 billion merger between American fast food restaurant chain Burger King and the Canadian coffee shop and restaurant chain Tim Hortons, the company is the third-largest operator of fast food restaurants in the world.[2] The company is based alongside Tim Hortons in Oakville, Ontario, but both chains retain their existing operations and headquarters in Oakville and Miami respectively. The merger focused primarily on expanding the international reach of the Tim Hortons brand, and providing financial efficiencies for both companies.

The company is majority-owned by the Brazilian investment company 3G Capital—the previous majority owner of Burger King—holding a 51% stake. The remainder of the company is publicly traded on the New York and Toronto Stock Exchanges, and owned by the prior shareholders of Burger King and Tim Hortons. The deal was approved by Tim Hortons' shareholders on December 9, 2014, and the company began trading on December 15, 2014.

History

On August 24, 2014, U.S. fast food chain Burger King announced that it was in negotiations to merge with the Canadian coffee shop and restaurant chain Tim Hortons;[3] the proposed merger would involve a tax inversion into Canada, with a new holding company majority-owned by Burger King's current majority-owner 3G Capital, and the remaining shares in the company held by current Burger King and Tim Hortons shareholders. A Tim Hortons representative stated that the proposed merger would allow Tim Hortons to leverage Burger King's resources for international growth; the two chains would retain separate operations post-merger.[4] News of the proposal caused Tim Hortons' shares to increase in value by 28 percent.[2]

On August 25, 2014, Burger King officially confirmed its intent to acquire Tim Hortons Inc. in a deal totalling CDN$12.5 billion (US$11.4 billion).[5] 3G Capital would purchase the company at $65.50 per-share, and existing shareholders would receive $65.50 in cash and 0.8025 shares in the new holding company: per-share—all-cash ($88.50) and all-shares (3.0879) options would also be available. Due to its iconic status in Canadian culture, Caira reassured the integrity of Tim Hortons following the purchase, stating that the acquisition would "enable us to move more quickly and efficiently to bring Tim Hortons' iconic Canadian brand to a new global customer base."[2][6]

Although tax inversions, a process in which a company decreases the amount of taxes it pays by moving its headquarters to a country with lower rates, but maintains the majority of their operations in their previous location, have been a recent financial trend, it did not have as much of an impact on Burger King's reincorporation in Canada. The corporate tax rate in the United States is 39.1%, while Canada's corporate tax rate is only 26%: however, Burger King had already used various sheltering techniques to reduce its tax rate to 27.5%. As a high-profile instance of tax inversion, news of the merger was criticized by U.S. politicians, who felt that the move would result in a loss of tax revenue to foreign interests, and could result in further government pressure against inversions (which had, until the Burger King merger, been primarily invoked by pharmaceutical firms).[7][8][4][5] 3G Capital co-founder Alex Behring denied that the merger was tax-related, stating that it was "fundamentally about growth and creating value through accelerated expansion."[9]

The deal was approved by the Canadian Competition Bureau on October 28, 2014, ruling that the deal was "unlikely to result in a substantial lessening or prevention of competition."[10] The deal was approved by Minister of Industry James Moore on December 4, 2014: the two companies agreed to conditions, requiring that the Burger King and Tim Hortons chains retain separate operations, not combine locations in Canada and the United States, maintain "significant employment levels" at the Oakville headquarters, and ensure that Canadians make up at least 30% of Tim Hortons' board of directors.[11] Tim Hortons shareholders approved the merger on December 9, 2014: the same day, it was announced that the new holding company would be known as Restaurant Brands International, and trade under the ticker symbol QSR. Vice-chairman Marc Caira felt that the merger was the "next chapter" for Tim Hortons, envisioning a "bolder, more assertive, and dynamic Tim Hortons in the future" alongside its prospects for international expansion.[9][12]

Ownership and leadership

3G Capital (which held a 71% majority stake in Burger King) holds a 51% majority stake in Restaurant Brands International.[6] Berkshire Hathaway, who partially funded the merger, holds a 4.8% stake.[13] Burger King CEO Daniel Schwartz serves as CEO of the company, with previous Tim Hortons CEO Marc Caira being vice-chairman and director. Elías Díaz Sesé, formerly of Burger King's Asia-Pacific operations, was named the new president of Tim Hortons, while Jose Cil, formerly of Burger King's EMEA operations, was named the new president of Burger King.[14]

References

  1. ↑ http://api40.10kwizard.com/cgi/convert/pdf/RestaurantBrandsInternationalInc-20161024-10Q-20160930.pdf?ipage=11191306&xml=1&quest=1&rid=23&section=1&sequence=-1&pdf=1&dn=1
  2. 1 2 3 Evans, Pete (26 August 2014). "Tim Hortons, Burger King agree to merger deal". CBC News. Retrieved 26 August 2014.
  3. ↑ Sieniuc, Kat; Atkins, Eric (24 August 2014). "Burger King in talks to acquire Tim Hortons". The Globe and Mail. Retrieved 25 August 2014.
  4. 1 2 Hoffman, Liz; Mattioli, Dana (25 August 2014). "Burger King in Talks to Buy Tim Hortons in Canada Tax Deal". Retrieved 25 August 2014.
  5. 1 2 De La Merced, Michael (26 August 2014). "Burger King to Buy Tim Hortons for $11.4 Billion". New York Times. Retrieved 26 August 2014.
  6. 1 2 Atkins, Eric; Nelson, Jacqueline (24 August 2014). "Burger King, Tim Hortons ink merger deal for $12.5-billion". The Globe and Mail. Retrieved 26 August 2014.
  7. ↑ Puzzanghera, Jim (25 August 2014). "Burger King, Tim Hortons talks could turn up heat on tax inversions". Los Angeles Times. Retrieved 26 August 2014.
  8. ↑ McKinnon, John D.; Paletta, Damian (25 August 2014). "Burger King-Tim Hortons Merger Raises Tax-Inversion Issue". Wall Street Journal. Retrieved 26 August 2014.
  9. 1 2 Shaw, Hollie (9 December 2014). "Tim Hortons enters 'next chapter' as shareholders approve Burger King's $12.5 billion takeover". Financial Post. Retrieved December 10, 2014.
  10. ↑ Evans, Pete (28 October 2014). "Tim Hortons, Burger King deal OK'd by Competition Bureau". CBC News. Retrieved 10 December 2014.
  11. ↑ Shaw, Hollie (4 December 2014). "Burger King promises to ramp up Tim Hortons' U.S. expansion as Ottawa approves takeover". Financial Post. Retrieved 10 December 2014.
  12. ↑ "Tim Hortons, Burger King finalize merger to form Restaurant Brands International". Edmonton Journal. Canadian Press. 12 December 2014. Retrieved 13 December 2014.
  13. ↑ Buhayar, Noah (15 December 2014). "Berkshire to Hold Larger Stake in Burger King-Tim Hortons Parent". Bloomberg Businessweek. Retrieved 15 December 2014.
  14. ↑ Calia, Michael (15 December 2014). "Restaurant Brands Unveils Management Structure". The Wall Street Journal. Retrieved 15 December 2014.
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