Buffett defends Burger King move
American billionaire Warren Buffett has denied Burger King relocating its headquarters to Canada as part of its takeover of coffee chain Tim Hortons is motivated by lower taxes.
The fast-food giant has come under fire in the US amid claims of tax inversion - when corporations relocate headquarters to a nation with lower taxes - following the announcement of a $11bn deal that will create the world’s third biggest fast food group.
Companies which have completed inversions have faced a public backlash and President Barack Obama and the US Congress have criticised the practice, which diminishes government tax revenue.
But Mr Buffett, who is backing the deal via a $3bn investment through his Berkshire Hathaway firm, told the Financial Times that moving Tim Hortons to America might be unpopular with Canadians.
“Tim Hortons earns more than Burger King does,” he told the paper. “I just don;t know how the Canadians would feel about Tim Hortons moving to Florida. The main thing here is to keep the Canadians happy.”
With combined sales of about $23bn and about 18,000 sites, the tie-up will create a beefed-up firm that could pose a greater challenge to rivals such as McDonald’s and Starbucks.
The move gives US-based Burger King a stronger foothold in the coffee and breakfast market and should also lower its tax bill with the new company’s headquarters in Canada, though the firm itself has said that was not the main motivation for the deal.
Daniel Schwartz, CEO of Burger King and a principal of 3G Capital, said the company did not expect to achieve any “meaningful tax savings”.
