Buffett Provides $3B of Financing on Burger King Deal

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Aug. 26 (Bloomberg) -- Warren Buffett’s Berkshire Hathaway is providing financing for Burger King’s planned takeover of Tim Hortons, the latest deal being backed by a commitment from the billionaire. Sullivan & Cromwell partner Frank Aquila and Bloomberg’s Noah Buhayar speak on “Market Makers.” (Source: Bloomberg)

Buffett's role as a financier.

We are in seattle this morning.

This is not the first on the buffet is jumped in to a situation like this.

He provided some preferred acquisition financing to heinz.

He did it for dow chemical.

But this feels different, doesn't it?


He has done this before.

He has used berkshires balance sheet to basically become a source of financing for acquisition.

He is also done it for deals during the financial crisis.

He injected liquidity into goldman sachs.

This is different, because this is the second time he has teamed up with 3g, obviously they are the controlling shareholder in burger king.

This is another example of what he is trying to do with the $55 billion that is piled up in his company.

Frank, wire berkshires dollars better than your dollars -- why are berkshires dollars better than your dollars?

They can't go to the banks for more debt financing, or can't do something it can -- akin to a rights offering.

Offering existing shareholders the ability to buy preferred.

It may come with an attractive orange.

-- warrant.

Could borrow elsewhere.

But when you borrow from berkshire hathaway, it's not just borrowing and getting the cash.

You are getting a strategic partner.

And that is what these companies have gotten in berkshire hathaway.

That was my question.

Is he going to get a say in his company, or is he going to stand back and let 3g run the show?

I think he will be hands off.

He made that pretty clear in the statement.

If you listen to what he said about heinz, he has really let 3g run that.

At the same time, he's going to be available for them if they want to pick up the phone and ask a question.

That is the benefit of having his involvement.

Does this put him at odds with the obama administration at all?

That is a great question.

He objects year -- the optics here are tough.

We have to separate out what buffett does on berkshire's behalf, and what buffett does and says when he is espousing his personal beliefs and philosophies.

He does run berkshire in a way that is tax efficient.

He has done a number of deals over the past several months that you could argue were done to limit berkshires tax bill.

At the same time, he will have to pay u.s. taxes on any proceeds he gets from this investment.

That will roll up into berkshire hathaway, which is based in omaha, nebraska.

He has never said anything about moving berkshires tax domicile.

How closely should we pay attention to this growing partnership between buffett and the brazilian behind 3g capital?

They are good friends.

They have been together in various pursuits for a number of years, since they were on the gillette award -- board some time ago.

Will they do big things?

They already done a lot of big things.

I think this is something we have to pay very close attention to.

3g has a really deep bench of managers, and they are obviously out there and very inquisitive.

This is one of the key ways that berkshire is going to be getting money out the door.

Covers burt for seattle.

Here in new york city, frank aquila, a partner at sullivan and cromwell.

Coming up, a you to remember

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