In our previous article about the Burger King (BKW)/Tim Hortons (THI) deal, we laid out our reasoning to get behind the deal and why we thought it was a good move on both companies parts.
One of the reasons that we took our stance was the involvement of one Warren Buffett, who has arguably the best track record of any investor in history. We will do a double take on any company Mr. Buffett chooses to stand behind, simply because he only invests when he sees value, and he's not known for being rushed or bullied into positions. Notably, Mr. Buffett's stake in Bank of America (NYSE:BAC) has yielded him billions. In addition, he also helped inject cash into GE (NYSE:GE) and Goldman Sachs (NYSE:GS) when they needed it during the financial crisis.
What we found out this weekend was that Mr. Buffett's 30,000 preferred shares in the Burger King deal come with warrants to buy a 1.75% stake in the combined company. Those warrants are there for a reason, there's no doubt that Mr. Buffett likes the potential of the future combined company the same way that we do.
This news was first reported on by Bloomberg and has come after months of speculation as to how Berkshire was going to use its mounting pile of cash. Many were wondering what the next investment was going to be, knowing that Buffett isn't necessarily open to the idea of stock buybacks.
This news says to us that Mr. Buffett is going to be in this deal for the long haul and that he likes to long-term appeal behind this new company. It's another reason for us to like the Burger King/Tim Hortons deal.
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The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.