UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): August 26, 2014
BURGER KING WORLDWIDE, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware | 001-35511 | 45-5011014 | ||
(State or Other Jurisdiction | (Commission | (IRS Employer | ||
of Incorporation) | File Number) | Identification No.) |
5505 Blue Lagoon Drive
Miami, Florida
(Address of Principal Executive Offices)
33126
(Zip Code)
(305) 378-3000
(Registrants Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
x | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 8.01 | Other Events |
On August 26, 2014, Burger King Worldwide, Inc. and Tim Hortons Inc. hosted a conference call for investors to announce that the companies have entered into a definitive agreement under which they will create a new global quick service restaurant company to be based in Canada, the largest market of the combined company. A copy of the investor presentation is attached as Exhibit 99.1 to this Form 8-K.
Item 9.01 | Financial Statements and Exhibits. |
Exhibit 99.1 | Investor Presentation |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
BURGER KING WORLDWIDE, INC. | ||
By: | /s/ Jill Granat | |
Jill Granat | ||
Senior Vice President, General Counsel |
Date: August 26, 2014
Exhibit 99.1
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Creating a Global QSR Leader
August 26th, 2014
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This presentation includes forward-looking statements, which are often identified by the words may, might, believes, thinks, anticipates, expects, intends or similar expressions and includes statements regarding (1) expectations whether a transaction will be consummated, including whether conditions to the consummation of the transactions will be satisfied, or the timing for completing the transaction, (2) expectations for the effects of the transaction or the ability of the new company to successfully achieve business objectives, including integrating the companies or the effects of unexpected costs, liabilities or delays, and (3) expectations for other economic, business, and/or competitive factors. Other unknown or unpredictable factors could also have material adverse effects on future results, performance or achievements of the combined company. These forward-looking statements may be affected by risks and uncertainties in the business of Burger King and Tim Hortons and market conditions. This presentation is qualified in its entirety by cautionary statements and risk factor disclosure contained in filings made by Burger King and Tim Hortons with the U.S. Securities and Exchange Commission, including Burger Kings annual report on Form 10-K for the year ended December 31, 2013 and Tim Hortons annual report on Form 10-K for the year ended December 29, 2013. Both Burger King and Tim Hortons wish to caution you that certain important factors may have affected and could in the future affect their actual results and could cause their actual results for subsequent periods to differ materially from those expressed in any forward-looking statement made by or on behalf of Burger King or Tim Hortons. Neither Burger King nor Tim Hortons undertakes to update any forward-looking statements included in this presentation.
1
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Participants
Marc Caira
President & Chief Executive Officer, Tim Hortons Inc.
Alexandre Behring
Executive Chairman of the Board, Burger King Worldwide Inc.
Daniel Schwartz
Chief Executive Officer, Burger King Worldwide Inc.
Cynthia J. Devine
Chief Financial Officer, Tim Hortons Inc.
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Companies at a Glance
Canadas Leading QSR Chain
Undisputed QSR leader in Canada with growing U.S. presence that has been serving great-tasting coffee and baked goods for the last 50 years
+$6bn in system sales with more than 100,000 team members(1)
Market Cap: C$9 billion, $8 billion(2)
#2 Fast Food Hamburger Chain Globally
Iconic 60 year old brand universally known for great-tasting, flame-grilled hamburgers
Present in nearly 100 countries with +$16bn in annual system sales and nearly 350,000 team members worldwide(1)
Market Cap: $10 billion(2)
1) Substantially all of these team members are employed by franchisees
2) As of August 22, 2014
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Agenda
Transaction Highlights
Tim Hortons Overview
Burger King Overview
Transformational Opportunity
Financing Highlights and Timetable
4
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Transaction Overview
Offer price of C$89.32 per share, C$65.50 in cash and 0.8025 shares of the new company per Tim Hortons share, equating to C$23.82 based on the Burger King closing price as of August 22nd, 2014
Premium of 39% to 30-day volume-weighted average share price and 30% premium to Aug 22nd
3G Capital will own 51% of the pro forma new company, other Burger King shareholders will own 27%, and Tim Hortons shareholders will own 22%
Closing expected in late 2014 / early 2015
Subject to regulatory and Tim Hortons shareholder approval
Leading growth and profitability driving long-term value creation for all shareholders
Attractive free cash flow generation supports rapid deleveraging
Potential to unlock significant synergies by accelerating Tim Hortons international footprint, sharing best practices and leveraging shared services
New company to be headquartered in Canada, the new companys largest market and natural location for its headquarters
Tim Hortons and Burger King brands to be managed independently with brand headquarters remaining in Oakville, Ontario and Miami, Florida, respectively
Franchisee relationships to be managed independently by respective brands
New company to be listed on TSX and NYSE with 3 of 11 Board seats being held by Canadian residents
Consideration and Timing
Value Creation
Structure
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Creating a Global QSR Leader
Creating 3rd Largest Global QSR
New public company will generate $23bn in system sales with attractive business mix
Catalyzing Tim Hortons Untapped International Potential
Opportunity to apply Burger Kings scale, capabilities and infrastructure to accelerate Tim Hortons growth
Preserving Rich Heritages of Both Brands and Sharing Best Practices
Independently managed brands with shared best practices
Continuing Commitment to our Communities and Causes
Actively support both companies local communities causes
Generating Substantial Value for Shareholders
Significant premium for Tim Hortons shareholders today with long term equity upside
6
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Agenda
Transaction Highlights
Tim Hortons Overview
Burger King Overview
Transformational Opportunity
Financing Highlights and Timetable
7
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Tim Hortons Overview
Canadas Leading QSR
42% traffic share with $6.5bn+ in system sales
Strong Customer Loyalty
3,630 Canadian units generate ~C$2.2 million AUV
Fully-Franchised Business Model
99.5% franchised with average franchisee operating 3-4 units
Vertically Integrated Strategy
5 distribution, 2 coffee-roasting, and 1 fondant facility
Significant International Opportunity
Of 4,546 units, only ~1% are located outside of N.A.
Deep Canadian Roots
Founded in 1964 by legendary Canadian hockey player
Leader in Fast-Growing Breakfast Daypart
Signature offerings include coffee and baked goods
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An Unparalleled Canadian Success Story
Beloved and Highly Recognizable
#1
Most Trusted Canada Coffee Retailer Brand
Ipsos Read
#6
Canada Most Influential Brand
Ipsos Read
#61
Most Beloved Brands
Worldwide APCO Insight
1) Source: THI investor presentation and NPD Crest (12 months ended November 2013)
Canadas Favourite
Total Caffeinated Beverages
% Share of QSR Servings
All Other QSR 11%
5%
10%
75%
Canadian Caffeinated Beverage Market Share
77% Cold Specialty Coffee
76% Hot Tea
76% Brewed Coffee
65% Hot Specialty Coffee
75% Total Caffeinated Beverages
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Tim Hortons Strategic Vision will Continue
Lead, Defend & Grow
Continue leadership in Canada through day part expansion, menu innovation, and by leveraging technology
Must-Win Battle
Build scalable, profitable business in core and priority markets while growing unit economics
Grow, Learn & Expand
Continue to build on success in GCC while pursuing new international opportunities
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Track Record of Consistent Growth
Store Count
+4.2% CAGR
4,417
4,240
4,009
3,750
2010A 2011A 2012A 2013A
Canada Same Store Sales %
8% 8%
6% 6%
5% 5%
4% 4%
3% 3%
3% 2% 1%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Q1 14 Q2 14
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Strong Canadian Footprint with Global Ambitions
3,588 Canada Units (80%)
859 U.S. Units (19%)
38 Middle East Units (1%)
Canada
3,588 stores in 11 provinces and territories
5 distribution centers and 2 manufacturing facilities
Fleet of branded trucks
U.S.
859 stores in 11 states
1 manufacturing facility
Operating in the U.S. since 1984
International
38 stores across UAE, Oman, Qatar and Kuwait
Operating in the Middle East since 2011
Source: THI 2013 year end filings and Planet Retail.
Note: Excludes 255 licensed locations in the UK and Ireland.
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Agenda
Transaction Highlights
Tim Hortons Overview
Burger King Overview
Transformational Opportunity
Financing Highlights and Timetable
13
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Burger King Overview
#2 Fast Food Hamburger Chain Globally
$16bn+ in sales, serving 2.3bn guests annually
Global Brand Presence
~14,000 restaurants in nearly 100 countries
Fully-Franchised Business Model
QSR industry-leading EBITDA margins
Accelerating International Growth
Among fastest-growing QSRs with proven MFJV model
Revitalized US Business with 4 Pillar Strategy
Menu, Marketing, Image and Operations
Rich Heritage
Founded in 1954 with deep ties to Miami community
Stable, Reliable Long-Term Ownership
Actively managed by 3G since 2010
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Burger Kings Proven Strategy
Strategy Initiatives Results
International
Accelerate NRG and continued SSS growth
U.S. & Canada
Increase average unit sales with Four Pillars plan
Franchised Business Model
Accelerate growth of Master Franchise JVs (MFJV) and Development Agreements
Capitalize on emerging middle class consumer spending and under-penetration of the brand
Transformed business into a cash flow generative platform for growth
Increased NRG by 4x since 2010 Expanded brand into ~100 countries Pioneered MFJV model
3 consecutive quarters of SSS growth On track to achieve 40% remodel target
Completed refranchising in 2013 Best-in-class EBITDA margins Generating cash to deleverage quickly
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Growing Global Brand
Burger King has quadrupled the pace of its international growth over the past four years with its proven MFJV(1) strategy. Almost 50% of its restaurants are outside of the U.S. today
Burger King Global Footprint
Brazil JV
3X Store Count
317
102
2010 2013
China JV
3X Store Count
190
38
2010 2013
Russia JV
17X Store Count
174
10
2010 2013
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Agenda
Transaction Highlights
Tim Hortons Overview
Burger King Overview
Transformational Opportunity
Financing Highlights and Timetable
17
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Creating a Global QSR Leader
Creating 3rd Largest Global QSR
New public company will generate $23bn in system sales with attractive business mix
Catalyzing Tim Hortons Untapped International Potential
Opportunity to apply Burger Kings scale, capabilities and infrastructure to accelerate Tim Hortons growth
Preserving Rich Heritages of Both Brands and Sharing Best Practices
Independently managed brands with shared best practices
Continuing Commitment to our Communities and Causes
Actively support both companies local communities causes
Generating Substantial Value for Shareholders
Significant premium for Tim Hortons shareholders today with long term equity upside
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Creating 3rd Largest Global QSR
The transaction will create the worlds 3rd largest global QSR from two iconic brands
~$23bn in system sales and over 18,000 restaurants in ~100 countries
Company will be one of the fastest-growing global QSRs with leading growth metrics
Companies have similar franchised business models with complementary day-part and product mixes
Franchise
Fully-franchised restaurant base with 18,000+ units in ~100 countries
Real Estate
Extensive real estate portfolio with over 5,500 directly-owned and leased properties
Distribution
Highly-efficient distribution network that supports 3,600+ restaurants in Canada
Global System Sales ($bn)
Company Rank System Sales
#1 $89.1
#2 $43.0(1)
#3 $22.7
#4 $18.1(2)
#5 $16.3
#6 $10.0
#7 $9.2
#8 $8.0
#9 $6.4
#10 $5.0
1) Source: Morningstar
2) Source: Forbes
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Catalyzing Tim Hortons Untapped International Potential
By leveraging Burger Kings MFJV(1) model, Tim Hortons can accelerate the pace of its international growth
Burger King has successfully pioneered the MFJV model, allowing it to become a QSR leader in restaurant growth
Leveraging Burger Kings extensive partner network, we can accelerate the pace of Tim Hortons international growth and bring a Canadian icon to the rest of the world
Net Unit Growth %
5.6%
5.4%
3.2%
2.4%
1.6%
1.4%
1.3%
0.4%
Note: 2013 Net New International Units / 2012 Total Units
1) Master Franchise Joint Venture
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Creating A Global, Multi-Brand Platform
New Company to be headquartered in Canada, the new companys largest market and natural location for its HQ. We plan to manage the brands separately while benefiting from shared best practices and a common culture
New Company
Global Headquarters in Canada
Burger King Tim Hortons
Miami, Florida Oakville, Ontario
Revenue by Geography
International U.S.
13% 20%
Canada 67%
Brand and operational management for both companies to remain independent and based in Miami and Oakville respectively
Franchisee relationships to be managed separately
Restaurant images to remain independent with no co-branding
Corporate to manage overall business strategy, global development and shared services
Opportunity to apply Burger Kings international growth model, network and expertise to accelerate Tim Hortons growth
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Continuing Commitment to our Communities and Causes
Both companies are deeply involved in their communities and will continue these commitments on a broader platform
Scholarships in North America Libraries in EMEA & APAC Values-based curricula & Learning Centers in LAC
EDUCATING THE WORLDS YOUTH
TWO PILLARS
EDUCATION
EMERGENCY
RELIEF
Grants to employees of the BURGER KING system who are victims of disasters or other emergency hardship situations
DISASTER/EMERGENCY RELIEF
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Commitment to Canada
The New Company creates significant benefits for Canada
Governance
3 of new companys 11 directors will be designated by Tim Hortons
Tim Hortons franchisee Advisory Board to remain intact
No changes to franchise agreements and economics
Investment and Growth
Transaction will accelerate the Tim Hortons brand in the rest of the world
Transaction will facilitate additional investment in the Tim Hortons brand
Headquarters and Employment
New company will be headquartered in Canada and listed on the TSX and NYSE
Tim Hortons will maintain its brand headquarters in Oakville, Ontario
Employees will have more opportunities on a larger, more global platform
There will be no changes to restaurant level employment
Community
Tim Hortons will maintain its commitment to support local Canadian communities and causes such as the Tim Hortons Childrens Foundation and Timbits Minor Sports Program
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Generating Substantial Value for Shareholders
Value for Tim Hortons Shareholders
Long-Term Shareholder Value Creation
Opportunity for Significant Synergies
The New Company will create substantial value for all shareholders
39% premium to the 30-day volume-weighted average share price on August 22nd
Substantial premium to all-time share price high
Significant cash today with opportunity to participate in long-term upside
New Company will be a powerhouse in the restaurant industry:
Fast-growing, highly-profitable business with two iconic brands
Significant potential for further global growth
Strong cash flow generation profile
Revenue: Accelerate international growth of Tim Hortons
Purchasing: Leverage greater global scale to achieve savings and improve franchisee profitability
Costs: Enhance global shared services to improve efficiency across both organizations
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Strategic Partner with Long-Term Vision
3G Capital and its affiliates invest in leading consumer brands with significant growth potential
Family investors who have been partners for over 30 years
Long-term approach to investing
Focus on business operations through deep partner involvement
Deep understanding of consumer brands and commitment to global expansion
Largest non-food retailer in Latin America
Worlds Largest Brewer
Second largest fast food hamburger chain globally
Largest ketchup producer and 2nd largest producer of sauces
Year of Investment: 1983 1989 2010 2013
Current Market Cap: $7bn $179bn $10bn NA
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Agenda
Transaction Highlights
Tim Hortons Overview
Burger King Overview
Transformational Opportunity
Financing Highlights and Timetable
26
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Sources & Uses
3G Capital, Burger Kings majority shareholder, will own 51% of the new company
Other Burger King shareholders will own 27% of new company
Tim Hortons shareholders will own 22% of new company
Substantial free cash flow generation will allow for steady de-leveraging
Sources of Funds
USD billions unless otherwise indicated
Amount
Cash $ 0.6
Debt 9.0
Preferred Investment 3.0
New Common Equity 2.9
Total Sources $ 15.5
Uses of Funds
Amount
Value per Share (CAD) $ 89.32
Value per Share (USD) $ 81.57
Tim Hortons Equity Value $ 10.9
Tim Hortons Net Debt 1.0
Tim Hortons TEV $ 11.9
Burger King Debt Repayment & Fees 3.6
Total Uses $ 15.5
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Timetable
Subject to customary closing conditions, regulatory and shareholder approvals including:
Tim Hortons stockholder approval
Investment Canada Act approval
Tim Hortons and Burger King are committed to bringing significant benefits to Canada through this strategic transaction that will accelerate the global growth of Canadas most iconic brand
Specific undertakings will be given with respect to the new Companys plans and structure
Anti-trust and competition law approvals in U.S. and Canada
Transaction is expected to close late 2014 / early 2015
28
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Creating a Global QSR Leader
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