Buffett to get 9% on $3n Burger King investment
Warren Buffett’s Berkshire Hathaway Inc. is providing $3 billion of financing for Burger King Worldwide Inc.’s planned takeover of Tim Hortons Inc. and will earn nine per cent annual interest on the investment.
Berkshire is taking a preferred equity stake and won’t be involved in managing the restaurant business, according to a statement today from Burger King. 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 to take HJ Heinz Co. private.
“3G does a magnificent job of running businesses,” Buffett said in May at his company’s annual meeting in Omaha.
Burger King today said it would acquire the Oakville, Ontario-based coffee-and-doughnuts chain for about C$12.5 billion ($11.4 billion) in a deal that creates the third-largest fast-food company and moves its headquarters to Canada.
Buffett has shunned bets in publicly traded bonds with yields near record lows, preferring deals in which his reputation and the size of the cash hoard allow Berkshire to lock in better rates than those available to other investors.
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