Canadian Lawyer InHouse

21 cANAdIANlAwyermAg.com/INhouse DECEmBEr 2014 someone else is going to direct to a certain degree because at the end of the day every public company is for sale. So it's a bit of a grounding moment." Sutton says there was a "sobering" real- ization that kicked in that life was going to be different for a while. "With the potential to create a global powerhouse in the quick service restaurant industry, combining two iconic and strong, independent brands, it was also not hard to get excited about the transaction and the ex- pected benefi ts for all of the various stake- holders of Tim Hortons," Sutton remarked. The combined company is expected to generate $23 billion in system sales, with over 18,000 restaurants in 100 countries and be the third largest quick service res- taurant company in the world. "We realized that, through the transaction, Tim Hortons would have the opportunity to accelerate its growth internationally, while at the same time maintaining the brand's core values, employee, and franchisee relationships, community support and, of course, our sig- nature Always Fresh coffee." Sutton's group worked hard and she had strong principles about the way they wanted things done and the way they wanted the company represented, says Clay Horner, partner with Osler Hoskin & Harcourt LLP and vice chairman of the fi rm. A team from Osler, along with a team from Wachtell Lipton Rosen & Katz in New York represented Tim Hortons as outside coun- sel on the deal. "The triumvirate approach to things was really part of the special as- pect of the whole process." In choosing the deal team Sutton says she went by a formula she knows works: "You look for people who have been involved in the same types of situations in the past for these bear hug letters where you are asked to consider a complete purchase of the com- pany in the fi rst letter. In something like this you have to go and fi nd the best of the best and in Canada we felt that was Clay and the Osler team. Through other sources and con- versations we fi gured out he was someone we needed working with us," says Sutton. In the U.S., Tims had secured the services of Wachtell with the activist campaign and so it was just a natural extension to use them for this too, she adds. "That fi rm is very well known in the M&A world and they provided great service to us. They were a natural to extend this work to as well," she says. Many headlines touted the tax inversion aspect of the deal since Burger King would be moving its global head offi ce to Canada, but Wachtell partner Adam Emmerich says that was a "red herring." Canada's basic cor- porate tax rate is about 26 per cent while Burger King's current effective tax rate is in the mid to high 20s percentage range. "On the one hand, of course you recognize the resulting company will be Canadian, but it's hardly as if Canada is an offshore tax haven, and Tims and Burger King have very simi- lar market caps at the deal value," he says. In fact when the transaction was fi rst an- nounced Joe Oliver, minister of fi nance told The Globe and Mail the takeover was "not a tax dodge." And on Oct. 28 the Competi- tion Bureau announced it was issuing a "No Action Letter" with respect to Burger King's acquisition of Tim Hortons, noting "the Bureau concluded that this transaction OPPORTUNITY FOR INTERNATIONAL EXPANSION. Where do you go from here? Helping your clients realize the full potential of their business in a foreign market requires an understanding of the tax challenges they'll face beyond Canada's borders. Our tax specialists deliver the experience and diverse range of strategies you and your clients need to achieve international business success and capitalize on every opportunity. Contact John Durland, CA, International Tax Leader at 1.877.251.2922 or john.durland@mnp.ca ntitled-3 1 2014-11-25 8:31 AM

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