Berkshire Hathaway Inc. is providing financing for Burger King Worldwide Inc.’s planned takeover of Tim Hortons Inc., the latest deal being backed by a commitment from Warren Buffett, chairman of Berkshire.
Berkshire will invest $3 billion for preferred equity, according to a statement Tuesday from the restaurant companies that didn’t state the annual dividend on the stake. Buffett has previously injected capital into financial firms like Goldman Sachs Group Inc. and Bank of America Corp. at times of crisis and helped fund deals such as Mars Inc.’s purchase of Wm. Wrigley Jr. Co.
The latest transaction helps Buffett deploy some of Berkshire’s mounting cash pile, which grew to a record $55.5 billion at the end of June. It also deepens his company’s relationship with Jorge Paulo Lemann’s 3G Capital, which controls Miami-based Burger King. Buffett teamed up with Lemann’s firm last year to take H.J. Heinz Co. private.
“3G does a magnificent job of running businesses,” Buffett said in May at his company’s annual meeting in Omaha, Neb.
Burger King said Tuesday it would acquire the Oakville, Ont.-based coffee-and-doughnuts chain for about $11.4 billion in a deal that creates the third-largest fast-food company and moves its headquarters to Canada.
President Obama has criticized American companies that move to other nations in search of lower corporate tax bills. Between mid-June and late July, at least five large American companies announced plans to make such a shift – known as an inversion. That includes AbbVie Inc. and Medtronic Inc.
Buffett has supported Obama’s push to increase personal income taxes for the wealthiest individuals while striking deals that reduce Berkshire’s obligations to the government. This year, his company limited taxes on more than $1 billion of gains in Graham Holdings Co. stock by swapping the shares for assets owned by the former Washington Post publisher.
“We don’t add a tip” on top of our tax bill, Buffett said at the annual meeting. “And we do certain transactions that are tax-driven.” He cited renewable-energy investments that help lower Berkshire’s taxes.
Buffett has also favored investments in food and beverage companies with well known brands. In addition to the Mars bet, in which Buffett bought $4.4 billion in bonds paying 11.45 percent interest, Berkshire controls the largest stockholding of Coca-Cola Co. and owns See’s Candies and ice cream chain Dairy Queen.
Berkshire Hathaway also owns The Buffalo News, and Buffett is the newspaper’s chairman.