Tim Hortons Stimulates Burger King's Appetite For Growth
Tim Hortons Stimulates Burger King's Appetite For Growth
One of the most talked about deals in current times is the buyout of Canada's Tim Horton by US food monarch Burger King. King size questions are being raised about whether the deal may be difficult to digest for Canada's food business and whether Burger King's food business will be impacted adversely following the shift to Canada. But this deal is hard to ignore what with business royalty like Warren Buffet playing a key part in what is counted as the third largest deal of all times in the food business.
Who remains in the driver's seat is the big question. Some analysts are saying that Tim Hortons Inc. is not selling out to the Americans, but just expanding globally. But the iconic brand will definitely lose its Canadian identity following the takeover. The $12.5 billion acquisition of Tim Hortons by Burger King has also raised doubts about the ability of the Canadian brand to be true to its roots.
In an everything but the kitchen sink (and some even dispute that) deal, Burger King has snapped up the Canadian food chain in what is a huge score for the American food brand. The real brains behind this winning deal is Brazilian private equity firm 3G Capital Inc. It owns around 70% of the US food chain and it will now have a majority stake of the combined business entity. The union between Tim Hortons and Burger King has also left analysts wondering what's really cooking between the two. The combined company will now have its headquarters in Ontario. This is widely perceived as a bid by Burger King to escape taxes.
What should somewhat quell the Canadian fears regarding the fate of Timmy's (as Tim Hortons is fondly called in Canada) is that the food chain was previously bought by Wendy's International Inc as a chain in 1995. Wendy's held onto the Canadian food brand till it was spun as an independent publicly traded firm. But previous US ownership did nothing to boost the Canadian food chain's prospects.
The difference this time is that Tim Hortons and Burger King will continue to operate separately as well, clearly making this a win-win deal for them as well as their progeny, the new firm in Ontario. The Canadian food chain's Timbits have eaten their way into Canada's popular culture and contribute to the brand recognition of Timmy's. But Burger King's giant appetite for growth is perhaps what is prompting Tim Hortons to defend the deal and water down (or is it stir away?) any concerns that the iconic Canadian food chain brand will melt like sugar in one of its famous coffees.
Hockey has a close connection with the Canadian food brand as its founder was famous hockey legend Tim Horton. But the food chain brand is hardly skating on thin ice following its profitable deal with Burger King. Horton who co-founded the Canadian food brand is noted for having won 4 Stanley Cups. With so many changes since the time he founded Timmy's, Canadians would like to be reassured that the winning brand will not lose its distinctive patriotic flavor. With Burger King getting ready to rake in the moolah with the acquisition, it remains to be seen whether this marriage with Tim Horton's will have a happy ending for all. For those who do not believe in fairy tales, consider the solemn promise of the two wedded food chains that each will operate on its own and Whoppers will never accompany Timbits under one roof. If they are not telling whoppers, this may be the perfect match made in corporate heaven. After all, giving each other space is what matters as far as wedded bliss is concerned, especially when it all boils down to business.
