Tomahawk, WI 08/27/2014 (Basicsmedia) – Burger King Worldwide Inc. (NYSE:BKW) might have overpaid for Tim Hortons Inc. (USA)(NYSE:THI) in its attempt to create the third largest fast-food chain in America according to CNBC’s John Jannarone, who also believes that the deal is all about expansion and not for cost-saving synergies.
Burger King Worldwide Inc. (NYSE:BKW) according Jannarone has been pursuing Tim Hortons Inc. (USA) (NYSE:THI) for some time with the latter thought to have shown no signs of considering any form of a merger in the past. The $11 billion takeover bid seems to have been way too high than what Tim Horton had expected thus the reason behind the change of heart.
“Just look at the numbers if you compare it to last couple of days the premium does not huge, but going back last month this is a 57% premium. That’s pretty much double what everybody else has been paying so far this year for deals in North America,” said Mr. Jannarone.
The move to acquire Tim Hortons Inc. (USA) (NYSE:THI) continues to be seen’ as one of the ways that Burger King Worldwide Inc. (NYSE:BKW) is trying to use, to escape the huge tax bill in the U.S., compared to Canada. Burger King has already rubbished the inversion claims reiterating that it only acquired Tim Horton to accelerate its expansion plans in North America.
CNBC’s Andrew Ross has also confirmed that Warren Buffet will help finance the deal, forking out $3 billion in loan as part of the $12 billion financing package. The rest of the amount expected to come from JPMorgan Chase & Co. (NYSE:JPM) and Wells Fargo & Co (NYSE:WFC).
Nation’s Restaurant News Sarah Lockyer has rubbished claims that Chipotle Mexican Grill, Inc. (NYSE:CMG) will offer opposition in terms of competition to Burger King Worldwide Inc. (NYSE:BKW) especially at the back of the impending merger. Lockyer believes that Burger King joins the likes of McDonald’s Corporation (NYSE:MCD) and Yum! Brands, Inc. (NYSE:YUM) as the largest restaurant companies in the world.
“ I do think this is a defensive play I think what it provides burger king is an opportunity to tell Wall Street that look we now have a growth play, we now can make some real growth happen with Tim Horton’s,” said Lockyer.