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O Canada: Burger King is Headed North for $11.4 Billion Fast-Food Combination

By MP McQueen

U.S. fast-food chain Burger King Worldwide Inc. and Canadian coffee-and-doughnut chain Tim Hortons Inc. have agreed to an $11.4 billion tie-up that would send the combined company’s headquarters north in what may be the most visible corporate tax inversion yet.

Inversions have been growing in popularity as more U.S. companies seek to avoid high corporate taxes at home by acquiring companies in those foreign countries where the tax rates are lower. But the strategy has met with fierce opposition by lawmakers as well as the Obama administration.

Kirkland & Ellis and Paul, Weiss, Rifkind, Wharton & Garrison served as Burger King’s legal counsel, along with Canadian firm Davies Ward Phillips & Vineberg. Wachtell, Lipton, Rosen & Katz advised Tim Hortons with Canadian firm Osler, Hoskin & Harcourt. Munger, Tolles & Olson represented Berkshire Hathaway.

The merger would create the third-largest fast-food chain in the world, with about $23 billion in sales and 18,000 restaurants in 100 countries. Each chain would continue to operate separately under its own brand and maintain separate franchisee networks, the companies said.

The corporate headquarters of the combined parent company would be in Oakville, Ontario, where Tim Hortons is based. Burger King, which is majority-owned by a Brazilian global investment group 3G Capital Management LLC, would keep its home offices in Miami, Fla. and continue to pay taxes in the U.S., the companies said.

Under the terms of the agreement, which has been approved by the boards of directors of both companies, shareholders of Tim Hortons would get the equivalent of $59.81 in cash and 0.8025 common shares in the combined company for each share of Tim Hortons—a 39 percent premium over Tim Hortons’ closing price on Aug. 22. Alternatively, each Tim Hortons shareholder could elect to receive either $80.81 in cash or 3.0879 common shares of the combined company for each of their shares of Tim Hortons, subject to proration.

Burger King intends to finance the purchase with $9.5 billion in debt financing from Wells Fargo and J.P. Morgan. It also is getting $3 billion in preferred stock financing from Warren Buffett’s Berkshire Hathaway.

The deal is subject to Tim Hortons’ shareholder approval and antitrust and regulatory approvals in the U.S. and Canada. No shareholder vote is required of Burger King because it is majority-owned by 3G Capital.

This is the second time in its history that Tim Hortons, named after the former National Hockey League player who founded the company, has teamed up with a U.S.-based restaurant chain. It originally merged with Wendy’s International in 1995 but was spun off in 2006, according to the Toronto Globe and Mail.

Burger King’s senior vice president and general counsel is Jill Granat. Tim Hortons’ executive vice president and general counsel is Jill Sutton.

Kirkland & Ellis’ New York team for Burger King was led by corporate partners Stephen Fraidin, William Sorabella and David Feirstein, as well as tax partner Dean Shulman, debt finance partner Jay Ptashek and capital markets partners Joshua Korff and Michael Kim. Participating corporate associates were Elizabeth Freechack, Andrew Glickman, Dylan Hanson, Jessica Subler and Laura Sullivan. Also assisting was Chicago tax partner Mike Carew.

The Paul Weiss team for Burger King includes tax partner Jeffrey Samuels, counsel Alyssa Wolpin and associate Robert Killip.

The Davies team included lead M&A partner Patricia Olasker as well as M&A partners Jay Galbraith, Steve Harris, Alex Moore and Cam Rusaw. Competition partners George Addy and Charles Tingley also worked on the deal, along with tax partners Raj Juneja, employee benefits partner Jessica Bullock and capital markets partner David Wilson.

Wachtell’s team for Tim Hortons was led by corporate partners Adam Emmerich and Gordon Moodie. Antitrust partner Nelson Fitts, restructuring partner Eric Rosof, tax partner Jodi Schwartz and executive compensation partner Michael Segal also advised, with assistance from associates Francisco Jose Morales Barron, Oliver Board, Brian Bolin, Erica Bonnett, Tijana Dvornic,Caith Kushner, Edward Lee, Sara Lewis, Katherine O’Neill,John Robinson and Michael Schobel.

Osler’s team for Tim Hortons was led by the firm’s vice chair and M&A partner Clay Horner with M&A partner Douglas Bryce, competition and antitrust partner Michelle Lally, tax partners Dov Begun and Patrick Marley, banking partner Laurie Barrett, corporate partner Donald Gilchrist and pensions partner Douglas Rienzo also advising.

Munger, Tolles & Olson represented Berkshire Hathaway, with a team led by corporate partners Robert Denham and Mary Ann Todd and also included tax partner Stephen Rose and corporate associate Kimberly Chi.

Firms Advise $8.3 Billion Sale

By Brian Baxter

Roche Holding announced Monday its $8.3 billion acquisition of InterMune, a suburban San Francisco-based company lung disease drug developer, marking the latest in a series of deals by the Swiss drug giant.

The proposed purchase of InterMune is Roche’s largest deal since its $46.8 billion takeover of Genentech in 2009, and second major deal this summer following Roche’s $1.7 billion buy of San Diego-based Seragon Pharmaceuticals in July.

Davis Polk & Wardwell is representing Roche with a coporate team that includes corporate team includes partners Arthur F. Golden and Marc O. Williams, and associates Lee Hochbaum, Brian J. Snyder and Zain Ur Rehman.Also providing advice are partners Jean M. McLoughlin and Edmond T. FitzGerald, and associate Gillian Emmett Moldowan, executive compensation; partner Ronan P. Harty antitrust and competition; and Michael Mollerus, tax. All are based in the New York office.

Gottlieb Keller, a member of Roche’s executive committee, has served as the company’s general counsel since late 2007. Roche’s deputy director of the corporate law group Beat Kraehenmann is heading up matters in-house for the drug giant on its purchase of InterMune, which has been approved by the boards of both companies.

Cravath, Swaine & Moore has taken the lead outside legal advisory role for InterMune with a New York team that includes partners Faiza J. Saeed and Ting S. Chen and associates Amanda R. Fenster, Jennifer L. Tanaka and Jennifer Uren on M&A matters; partner Michael L. Schler and associate Jay S. Gill, tax; partner Eric W. Hilfers and associates Nicole F. Foster and Julia L. Onorato, executive compensation and benefits; partner Christine A. Varney and associate Margaret Segall D’Amico on antitrust matters; and partner David J. Kappos and associate Benjamin D. Landry, intellectual property.

A merger agreement filed by InterMune with the Securities and Exchange Commission states that its sale should close by year’s end.

Li-Hsien “Lily” Rin-Laures, a partner with Chicago-based IP boutique Marshall, Gerstein & Borun, is serving as IP counsel on the deal for InterMune along with the company’s director of legal affairs Carolyn Tang. InterMune’s general counsel Andrew Powell, who joined the company last year, is heading up matters in-house on the transaction.

Sullivan & Cromwell corporate partners Frank Aquila, Brian Hamilton and Krishna Veeraraghava and Gibson, Dunn & Crutcher corporate partner Jonathan Layne and counsel Andrew Hirsch are currently representing InterMune’s financial advisers at Centerview Partners and Goldman Sachs, respectively, on the target’s proposed sale to Roche.