Tim Hortons the Conquering Hero This Time
Cash, Martin, Winnipeg Free Press
If Tim Hortons Inc. is a Canadian national institution, then the merger (or sale) with Burger King ought to get patriot endorsement because it's designed to facilitate the export of the Timbit and the Double-Double, helping Canadian culture conquer foreign lands.
The $12.5-billion deal is not the largest or most surprising commercial transaction, but it is freighted with assumed national values both companies carry, Tim Hortons to a greater extent in Canada than Burger King in the U.S.
There's nothing more irksome to the Canadian commercial psyche than when a beloved Canadian brand is sold to Corporate America and another downtown Canadian head office goes dark.
But this is not a deal where the strong, opportunistic U.S. player buys a beloved but vulnerable Canadian company for pennies on the dollar.
The Tim Hortons/Burger King deal is not the exact opposite of that (Burger King is technically buying Tim Hortons) but just about.
For starters, the deal is being done between two very profitable players with strong, distinct brands.
And for once, the combined company's head office will stay in Canada. According to the corporate leadership of both companies, that's because Canada is actually the largest operating market -- twice the size of its American footprint -- of the combined entity.
(Despite the hue and cry about this being a corporate U.S. inversion play designed to reduce Burger King's tax bill, its CEO, Daniel Schwartz, took pains to say there would be no meaningful difference in the tax rates it pays.)
And according to the CEOs of both Tim Hortons and Burger King, as well as the managing partner of 3G Capital, the Brazilian-based private equity firm that will own 51 per cent of the new combined company, the deal is being made to effect international growth for Tim Hortons.
In other words, Burger King's shareholders effectively want to be able to share in the profits of what they believe to be Tim Hortons' fantastic international growth opportunities.
And it's Tim Hortons management's desire to grow faster internationally -- and their belief Burger King's network and expertise will help accomplish that -- that made Tim Hortons board unanimously endorse the deal.
Every business transaction has its own set of determining factors, but there has been a long track record of very successful Canadian retailers falling on their faces trying to crack the U. …