Tim Hortons Changes Good First Step, Scout Capital Says

Updated on

Aug. 9 (Bloomberg) -- Plans by Tim Hortons Inc., Canada’s largest coffee and doughnut chain, to buy back C$900 million ($872 million) in shares and reduce capital deployed in the U.S. are a “good first step” to boost value, Scout Capital Management LLC said.

Tim Hortons Chief Executive Officer Marc Caira yesterday announced plans to reduce investment in its U.S. operations starting in 2014 and raise debt to buy back stock.

“We were pleased to hear Marc Caira’s message that positive change is coming at Tim Hortons,” Adam Weiss, co-founder and co-portfolio manager of New York-based Scout Capital, said in an e-mail.

Activist investors Scout and Highfields Capital Management LP, which own 5.6 percent and 4 percent of the company’s outstanding shares respectively according to data compiled by Bloomberg, both pushed for an increase in leverage and scale-back of unprofitable U.S. operations.

“We look forward to meeting with Mr. Caira and gaining a better understanding of the actions management intends to take to realize the company’s potential and generate greater shareholder value,” Weiss said.

Tim Hortons rose 2 percent to C$61.08 at the close in Toronto and has gained 25 percent this year.

To contact the reporter on this story: Lauren S. Murphy in Toronto at lmurphy48@bloomberg.net

To contact the editor responsible for this story: Jacqueline Thorpe at jthorpe23@bloomberg.net