Boston, MA 08/27/2014 (wallstreetpr) – After Burger King Worldwide Inc (NYSE:BKW) and Tim Hortons Inc. (USA) (NYSE:THI) decided to tie-up, there were speculations of stronger foundation being laid down for much larger and stronger restaurant chain. Even though both these companies have poles apart menus and belong diverse markets and home ground, but what would be beneficial for both of them is the shares business model. The most amazing benefit of their tie-up is getting the financing as well as operations of various outlets outsourced.
Benefit of Tie-Up to 3G Capital Inc
The benefit of this merger between the two companies will be enjoyed by 3G Capital Inc. as well, which acquired Burger King in the year 2010 in order to expand its tentacles beyond geographical demographics and that too with a pinch of investment only. This has also become imperative because the U.S. market has reached its saturation point.
With the financing being received by Warren Buffet (worth$3 billion), 3G will also get a share of 51% in the combined company.
Burger King Worldwide Inc (NYSE:BKW), it must be noted, collects royalties mostly from its franchisees, which in turn help in expansion of brand to newer markets.
Statement from the Leaders
The Chief Executive officer of Burger King Worldwide Inc (NYSE:BKW), Daniel Schwartz said while talking to The Wall Street Journal, “The capital investment to grow the brand around the world comes from our franchisees. That’s why we like our business model.” Mr. Schwartz will be the presiding over the tied-up company as well.
This strategy has also enabled Burger King Worldwide Inc (NYSE:BKW) to enhance its earnings by 17% in the year 2013. Interestingly, its earnings increased to $234 million in 2013 from 2009. However, after it sold its restaurants to the franchisees, Burger King’s sales dropped considerably.
In the meanwhile, the CEO of Tim Hortons, Marc Caira said that their chain shall be able to enhance global foothold in a faster way, thanks to Burger King. Marc Caira shall be the Vice-Chairman of new company.
