When Burger King announced it would buy Tim Hortons earlier this week there was plenty of speculation about the motives behind the plan and whether it could really work. The business leaders involved, however, have a history of big, bold moves, and in many cases they’ve worked together before.
Below are the six rainmakers who are driving this deal and how they’re connected.
Company: Pershing Square Management
Location: New York, NY
Other Roles: Ackman is a prominent activist investor, whose Pershing Square hedge fund is known for its aggressive tactics. In 2012 Ackman was instrumental in a proxy fight that installed Hunter Harrison as CEO of Canadian Pacific Railway; he is currently involved in a hostile takeover attempt of of Botox maker Allergan by Quebec’s Valeant Pharmaceuticals. That deal, if completed, would also be an “inversion,” moving Allergan’s corporate headquarters outside the United States.
Role in the Burger King–Tim Hortons deal: Pershing Square owns a 10.9% stake in Burger King worth about $1.24 billion.
Why He Matters: Ackman was the key player in influencing burger chain Wendy’s to spin out Tim Hortons again as a public company in 2006. Both Pershing Square and Ackman have so far remained silent on the Burger King-Tim Hortons deal, but Ackman is known to admire 3G’s stewardship of Burger King. As a vocal investor who never shies away from stating his opinion about such things, his silence in this case constitutes an endorsement.
Company: Burger King
Location: New York, NY
Other Roles: He’s a Co-Founder & Managing Partner of 3G Capital, and is the company’s prefered representative at newly-acquired subsidiaries, as a board member at several 3G properties. He’s also a director at Heinz, which 3G took private in 2013.
Role in the Burger King–Tim Hortons deal: He’ll be Executive Chairman and a Director of the combined company, and has talked about expanding Tim Hortons beyond its current North American presence.
Why He Matters: With ‘executive’ added to his title, it appears he will have a more direct role in the operations of the new company. 3G has radically restructured Burger King, and it’s possible that a more active chair could make similar moves for Tim Hortons, which is already 95% franchise-owned. Heinz, a company in reasonable financial health and with growing sales, might be a closer model for recovering Tim’s.
Company: Berkshire-Hathaway Inc.
Location: Omaha, NE
Role in the Burger King–Tim Hortons deal:Buffett is putting up $3 billion in addition to Burger King’s $9 billion to purchase Tim Hortons.
Why He Matters: Buffett will reportedly not take part in the management of the new company, but his investment is a powerful endorsement of the deal.
Title: President & CEO
Company: Tim Hortons Inc.
Location: Oakville, ON
Other Roles: Previously he was Global CEO, Nestle Professional; before that President & CEO, Parmalat North America
Role in the Burger King–Tim Hortons deal: He’ll be Vice-Chair and a Director of the combined company, with a focus on overseas expansion. Tim’s has been attempting to evolve, launching a new dark roast coffee option and moving into the lunch market with chicken sandwiches. Tim Hortons will have three of the 11 seats on the new company’s board.
Why He Matters: The desire to expand Tim’s globally is driving Burger King deal, with Caira hoping that being owned by a major global corporate player will help accelerate the company’s growth plan. He’s reassured Canadians that Tim Hortons will remain independent of its new corporate parent, so you won’t be able to order a Whopper with your double-double any time soon. BK has a limited Canadian presence, so it’s unlikely that Tim’s Canadian operations will be modified to prevent inter-company competition. Caira has attempted to differentiate the BK deal from Tim’s earlier acquisition by Wendy’s, which ended with Tim’s propping up its American corporate parent.
Jorge Paulo Lemann
Title: Principal & Co-founder
Company: 3G Capital
Location: São Paulo, Brazil
Other Roles: Through his role as a founding partner in 3G, Lemann is a controlling shareholder in Anheuser-Busch InBev, the world’s largest brewer. He also sits on the board of Heinz, a role he added when 3G Capital bought the ketchup maker in 2013.
Role in the Burger King–Tim Hortons deal: 3G Capital is the controlling shareholder of Burger King, holding about 70% of its stock, and will hold 51% of the new combined company when the acquisition of Tim Hortons closes. He also has a close relationship with Warren Buffett, who is backstopping the merger with a $3 billion investment. The two collaborated to take Heinz private last year in a $23 billion deal.
Why He Matters: 3G has radically transformed Burger King, which it took private for $4 billion in 2010. 3G installed its own managers, drastically cut costs, sold off company-owned restaurants to franchisees, and took the company public again in 2012, since which time its market share has grown to more than $10 billion. 3G’s aggressive managerial style has helped Burger King grow internationally in the last few years; look for some of the same expansionary tactics to come to the new Tim Hortons.
Daniel S. Schwartz
Company: Burger King
Location: Miami, FL
Other Roles: Various executive roles with Burger King including COO and CFO. Also formerly a Partner at 3G Capital, responsible for managing private equity. After taking over as CEO from Bernard Hees, who moved to Heinz, he spent several months working at BK restaurants to learn the company’s systems and routines.
Role in the Burger King–Tim Hortons deal: He’ll be CEO of the combined company, with responsibility for day-to-day management and operational accountability.
Why He Matters: Orchestrated 3G’s purchase of Burger King in 2010, setting the stage for the company’s transformation. He had no food industry experience before BK, but he has presided over the sale of BK’s company-owned outlets and a significant cost-cutting program. BK’s leadership is unusually young for such a large company, and Schwartz is only 33.