How Tim Hortons' CEO pushed Burger King for more, three times

A Burger King sign and a Tim Hortons sign are displayed on St. Laurent Boulevard in Ottawa on August 25, 2014. (THE CANADIAN PRESS / Sean Kilpatrick)

TORONTO -- Tim Hortons executives spent nearly six months negotiating the US$11-billion takeover deal with Burger King, a process that saw the American company increase its offer for the coffee chain three times.

Documents filed with regulators on Tuesday illustrated lengthy talks that began last March with a suggestion to billionaire investor Warren Buffet, and soon brought Tim Hortons CEO Marc Caira into the mix through a conversation over dinner.

Within a few weeks, Burger King had submitted its first official offer for the Canadian company at $73 per share.

Over the coming months burger company's majority owner, 3G Capital, along with Burger King and Buffett's Berkshire Hathaway Inc., agreed to increase their offer, encouraged that plans by Tim Hortons to become more competitive in the quick service food market would push its stock higher and grow its quarterly results.

Burger King's offer first rose to $78 per share in May and by June had jumped again to $82.50.

But Caira wasn't satisfied, the documents say, and in August he and chief financial officer Cynthia Devine told Burger King executives they would need to make a higher offer and clear commitments to Tim Hortons stakeholders, its employees and to Canada.

"The Tim Hortons board of directors wanted Burger King Worldwide to support, by way of undertakings in connection with Burger King Worldwide's application under the Investment Canada Act, Tim Hortons core principles," the regulatory filing said.

Included in those assurances, Caira said he wanted Burger King to agree not to increase rent and royalty with Tim Hortons franchisees for five years, keep the company listed on the Toronto Stock Exchange and maintain the company's headquarters in Canada.

"The holdings board of directors would have three directors designated by Tim Hortons, a meaningful number of executives ... who were Canadian-based, the Tim Hortons brand would be separately managed and ... (Burger King) would agree to maintain Tim Hortons commitments to charitable organizations," the document said.

Burger King agreed and wound up bumping the offer price to $88.50 per share on Aug. 15, with the deal being finalized later that month.

Tim Hortons shares were ahead 50 cents to $88.73 on Tuesday afternoon, near a 52-week high of $89.99 on the TSX.