Analysis: Dollars to doughnuts, the Tim Hortons deal is a good one

Tim Hortons employees prepare coffee before the company's annual general meeting in Toronto, in...

Tim Hortons employees prepare coffee before the company's annual general meeting in Toronto, in this May 8, 2014 file photo. REUTERS/Peter Jones/Files

Lorne Gunter , QMI Agency

, Last Updated: 11:58 AM ET

When it comes to international business, we Canadians have to get over our inferiority complex. And we will have no better chance to throw off our nervous economic xenophobia than with the Burger King-Tim Hortons merger/takeover announced Tuesday.

Burger King is buying controlling interest in our de facto national doughnut chain because it (Burger King) wants to become Canadian, not because it wants Tim's to become American.

Our beloved purveyors of double-double coffees and sweet, holey confections – as Canadian as red-and-black plaid lumberjack shirts – won’t soon be calling their signature treats “donuts,” instead of “doughnuts.” We’ll still get to enjoy three extra letters for the price of six!

Also, for those Canadians worried about this “American” takeover, know that Burger King is really South American – it’s controlled by Brazil’s 3G Capital.

American mega-investor Warren Buffett is putting up a little more than a quarter of the more than $12-billion purchase price, but 3G is still in the driver’s seat.

The involvement of 3G should make no difference to economic nationalists opposed to foreign takeovers of Canadian business. A takeover from Amazonia should bother them as much as an American one.

But somehow a takeover by a non-American multinational is less offensive to rabid close-the-borders types. Apparently their anti-American bigotry is stronger than their love of tariffs and foreign investment restrictions.

The current Tim's-Burger King merger/takeover is reminiscent of the 2005 Molson-Coors merger/takeover. At the time there were howls that Canada’s second oldest company (after Hudson’s Bay Co.) was going to lose its famous “I am Canadian” identity.

It hasn’t.

And speaking of HBC, it still bills itself as “Canada’s iconic department store” and is still the biggest clothing sponsor of our Olympic teams despite being owned by NRDC Equity Partners of New York. Indeed, HBC still looks and acts Canadian even as it now runs Saks Fifth Avenue and Lord and Taylor in the U.S.. on behalf of NRDC.

There is very little meaningful economic nationalism anymore. While barricade-charging, Occupy-movement types continue to demand government intervention to preserve some sort of false national corporate autonomy, the world has changed.

And Canadians are as strong as anyone at playing the globalization game. That’s one of the reasons Burger King is amalgamating with Tim Hortons – it wants to take advantage of Canada’s lower-tax, pro-business policies.

Consumers have less to fear from corporations than they do from government.

If you want to continue to get your morning caffeine-and-glazed-dough fix from Tim’s, a corporation is more likely to honour that desire than a government is. So long as your product tastes favour one brand over another, a corporation is less likely to change that brand. It’s in its interest (and yours) to stay the same.

Win, win.

A government is more likely to cling to outdated consumer choices because it thinks there are votes to gain in doing so.

Buffett’s involvement is ironic. His company, Berkshire Hathaway Inc. will get a solid 9% guaranteed return on its investment, paid for in large part because Burger King, which will move its HQ from Miami to Oakville, Ont. (at least on paper), will save as much as 40 % in corporate taxes by coming north.

The irony is that Buffett, who is a supporter of U.S. President Barack Obama, has been very vocal about the duty of wealthy Americans and American companies to pay higher taxes to fund social programs and economic meddling by the U.S. government.

What’s truly sweet in the Tim’s deal is this: After decades of losing businesses to the U.S. because of their lower-tax, more pro-business attitude, the doughnut is now in the other hand.

lorne.gunter@sunmedia.ca


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