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Breakingviews: Activist burger flip?

Tuesday, August 26, 2014 - 02:51

Breakingviews editors look at Burger King buying Tim Hortons and wonder why investor Bill Ackman backs the deal after pushing U.S. burger chain Wendy's to offload Tim Hortons last decade.

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So Beijing is buying it Tim -- of Canada -- roughly ten billion dollar deal we got the details this morning. But these properties burger king and Tim -- been tossed around a bit in the possible. Interesting thing with Tim Hortons rope used to be and by Wendy's and Wendy's got rid of it became a separate company you know it was a -- that he was hassling for that at that time the -- Square yet in 2005 the -- men. The nine point 9% of Wendy's -- argued very persuasively and very reluctantly spit you there's no reason that his arguments were basically. That it was under valuing both brands that there were minimal as the word -- synergies and combining two of them. It did the management team to be compensated better by having -- shares. Directly related to that the businesses that they operated they would be able to attract and retain talented management. Lobbed up a lot we believe that many shareholders and members of Wall Street research analyst community frequently questioned the benefits of having Tim Hortons at the same corporate structure. As the burger chain given and. So it's sizzling run exhibit that was the US aggregates and Pennington owns this it's emblem scope spun off so yeah it now we have a US open to change buying temple more than his objection over in the US bogey -- 10% plus. It's still rock and has 11% against downside with the idea of a US victory Friday. So this. Is just -- mean this is just puzzling because the logic of this argument it is is impeccable that is as it often is that bill -- -- and that cut and the company. And its shareholders backed him in 2005. The company then started to spin it off and -- the whole thing off over subsequent a year. That's worked out very well worked up Wendy's accidentally bought by Nelson Peltz and arguments. Triumph and it worked very well for Tim Hortons. So all that makes sense but it's just stunning because now what you have is you're going from two shares which presumably incentivized to set amendment right to one chair. There's no clear at view about about synergies from the company president and Lisbon but now it looks like it'll mostly be -- Operation. There's no number so so all we can assume is that if you had a really robust number that was amenable but you would tell shareholders. And yet so bill is behind it and all shareholders who batted something like four point by everybody billion dollars go massively. Right so I mean I guess the only conclusion -- come to -- still working this obviously is. That a little financial engineering goes a long way so what you have is a huge dollop of debt that's being put on this is essentially writes that he -- it's an -- -- -- -- public and outweighs the strategic things that it is so inevitable right so forget the strategy let's look at the financial engineering and never. Believe that that will be following this story double breaking news -- tomorrow.

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Breakingviews: Activist burger flip?

Tuesday, August 26, 2014 - 02:51