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Burger King to buy Tim Hortons for $11.4 billion

BY Marianne Wilson

Miami — Burger King Worldwide agreed to buy Canadian quick-serve chain Tim Hortons for approximately $11.4 billion, creating the world’s third largest quick-serve restaurant company. Under a tax inversion deal, the corporate headquarters of the new company will be in Canada, where the combined company’s biggest market will be.

The two chains will continue to be run independently. Burger King will still operate out of Miami, and Tim Hortons will remain based in Oakville, Ontario. The combined company will have 18,000 restaurants in 100 countries, and $23 billion in annual revenue.

The location of the corporate base outside the United States is sure to ignite controversy as it comes at a time when such moves are coming under heavy criticism from Washington. According to the New York Times however, the decision to locate the headquarters in Canada is primarily aimed at appeasing Canadian regulators wary of a company outside its borders buying such a beloved national icon as Tim Hortons, Burger King is expected to save only a little on taxes through the move, the report said.

Under the terms of the deal, Burger King will pay 65.50 Canadian dollars in cash and 0.8025 of one of its shares for each Tim Hortons share. That amounts to about 94.05 dollars a share, or $85.78 a share, based on Burger King’s closing price on Monday.

3G Capital, the Brazil-based private equity firm that controls Burger King, will retain majority control of the combined company, with a 51% stake. Alex Behring, 3G managing partner Alex Behring will be executive chairman of the merged company.

“Our combined size, international footprint and industry-leading growth trajectory will deliver superb value and opportunity for both Burger King and Tim Hortons shareholders, our dedicated employees, strong franchisees, and partners,” Behring said in a statement. “We have great respect for the Tim Hortons team and look forward to working together to realize the full potential of these two extraordinary businesses.”

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Wegmans looks to win with “Wild Caught”

BY CSA STAFF

Leading Northeastern food retailer Wegmans is introducing a new line of peeled, deveined and wild-caught Gulf of Mexico shrimp and enticing shoppers with seafood promotion featuring a wide range of domestically sourced products.

Wegmans and the Gulf Seafood Marketing Coalition in a joint announcement said the retailer was celebrating the end of summer by featuring fresh Gulf seafood through Sept. 6 and was launching its proprietary line of wild-caught Gulf of Mexico peeled and deveined shrimp that would be available year-round. Plans also call for Wegmans to feature Gulf Coast seafood cooking demonstrations, freshly prepared wild-caught Gulf shrimp dish samples and educational grilling techniques at each of its 84 stores. The stores will showcase seafood harvested from Gulf of Mexico waters, including wild-caught shrimp, snapper, grouper and blue crab.

"Wegmans is dedicated to providing the freshest ingredients to our customers, helping to make great meals easy and affordable. The savory Gulf of Mexico seafood flavors fit into this plan, and the Gulf Seafood Marketing Coalition is a great partner to us," said Dave Wagner, Wegmans VP of seafood merchandising. "We are confident that once customers taste our new Wegmans brand wild-caught Gulf of Mexico shrimp and learn easy preparation techniques, it will soon become a favorite."

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DSW’s omnichannel efforts pressure profits

BY CSA STAFF

Fundamental changes in the way DSW serves its footwear customers in an omnichannel world will put significant pressure on profits during the second half of the year, according to president and CEO Mike MacDonald.

The leading retailer of branded footwear and accessories with 410 stores said sales for its second quarter increased 4.5% to $587 million and same store sales advanced 0.8% on top of a prior year increase of 4.4%. Profits increased to $34.3 million, or 38 cents a share, compared to prior year profits of $33.7 million, or 37 cents a share.

According to MacDonald, the company accomplished its goal of achieving improvement in the underlying sales trends and eliminating inventory imbalances during the quarter, with all major categories showing improvement from the first quarter.

“In addition, we were encouraged by the sequential improvement in sales trends as the quarter progressed. The actions we took to balance inventories created margin pressure but inventories at the end of the quarter were current and below the prior year on a cost per square foot basis,” MacDonald said. “We continued to make progress in our omnichannel initiative. The changes we are making are fundamental to the way we serve our customers. They will enable DSW to respond to the rapidly changing customer shopping patterns and maintain our position of strength in the footwear industry.”

Although MacDonald didn’t provide details on specific omnichannel strategies when the company announced second quarter results, he did note that the company’s full year profitability will be negatively affected by omnichannel expenses and expectations of flat same store sales growth. Omnichannel related expenses are expected to total $10 million or roughly seven cents a share, according to the company.

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