Warren Buffett to invest $3 bn in Burger King's acquisition of Tim Hortons
27 Aug 2014
Warren Buffett is investing $3 billion in Burger King's acquisition of Canadian doughnut and coffee chain Tim Hortons and avoid paying millions in US corporate taxes by moving part of its headquarters to Ontario, Daily News reported.
The move comes only a month after Obama denounced ''inversion'' tactics like this as an ''unpatriotic tax loophole'' and called for regulatory changes to curb them.
Ironically, around the time news of the deal first broke out, a White House spokesman was explaining what Obama was hoping to do by banning inversions.
''The goal here is to change the law and get Congress to pass legislation that would prevent the ability of US corporations to renounce their citizenship all in pursuit of trying to get out of paying their fair share of US taxes,'' he said.
Buffet's decision to finance Burger King's inversion transaction, first reported by The Wall Street Journal, comes as the latest example of a prominent billionaire investor supporting such a deal, Forbes reports.
The deal in fact, is being pushed by Jorge Paulo Lemann, Brazil's richest man and co-founder of 3G Capital, the private equity firm with a majority stake in Burger King.
According to commentators, the reason big investors liked inversion deals was clear from the way shares of Burger King and Tim Hortons shot up. While the tax considerations were not the only factor driving the companies and investors, shares of both companies rose by about 19 per cent. Typical acquisitions see shares of the buying company fall when deals are announced.
According to commentators, it would be interesting to see Obama's reaction to Buffett's involvement with the Burger King deal.
In the past Buffett has been supportive of several of Obama's initiatives, particularly his efforts to increase taxes on the rich and close tax loopholes.
The White House had not offered comment on the deal on Monday Buffett's involvement became public.
Investment banks, ranging from Goldman Sachs to Morgan Stanley, had drawn substantial amounts of fees associated with inversion deals in the last couple of years.
