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Doughnuts to Dollars: Three quick M&A communication takeaways from the Burger King-Tim Horton’s merger
September 2014
BY Scott Westcott

It’s the deal that has amped up the caffeine jitters among Tim Horton loyalists.

The pending Burger King acquisition of Canada’s Tim Horton’s was certain to evoke a strong response. So far, it appears the strategic communications effort has been relatively sound in staying on message and addressing concerns and questions. Considering that we work with several clients in some of Tim Horton’s most successful U.S. markets – and also that the proposed merger involves the hot-button issue of inversion -- we’re following developments closely. From our perspective, as news of the merger settles in, three quick M&A communications lessons have emerged.

Anticipate the impact: Tim Horton’s customers on both sides of the border love the place and what it stands for. They have deep affinity for the brand, view the coffee as their essential daily fuel, and identify personally with the company that’s named after a beloved Canadian hockey star. Canadians even ranked Tim Horton’s as their “country's most reputable company” last year. As expected, many ‘Timmy’ loyalists are startled and upset by the merger news. Both Tim’s and Burger King, controlled by the hugely successful Brazilian investment firm 3G Capital and backed by Warren Buffet, appeared ready for the backlash. They’ve emphasized up front and often that the two restaurants will maintain their own identities – and will, for the most part, refrain from the less-than-appetizing thought of Whoppers sitting next to doughnuts. The message got through – even third party experts were touting the company line on the day the deal was announced. “Properly managed, there is huge upside to the proposed merger…” said Queens University business professor Ken Wong in Toronto’s The Globe & Mail. “But I don’t think you will be seeing Tim Horton’s selling fries and burgers.”                                                                                      

Make the clear business case: Successful M&A communications pairs a response to emotional reactions with a sound, well-reasoned business rationale. In this case, the talking points have been clear and to the point:

  • Save on taxes by moving headquarters north of the border.
  • Leverage economies of scales.
  • Sell more and better coffee at Burger King, while not messing with the good thing Tim Horton’s has going.
  • Create the potential for a fast-food powerhouse to rapidly extend its reach into the U.S. and re-energize the Burger King brand.

Investors and analysts seem to like what they heard – both stocks have seen positive momentum since the announcement. Whether on Wall Street or Main Street, people can quickly understand how this deal seems to have significant upside from a business perspective.

Know you can’t please them all: Change is difficult – and it gets processed by individuals in their own unique way, depending on a range of factors and experiences. An M&A deal is always going to have its detractors – be it for emotional, economic or other reasons. When planning for and executing an M&A deal, it’s best to acknowledge this reality up front – and use it as a means to anticipate and thoroughly prepare for likely questions, concerns and reactions. Ultimately, a key consideration is identifying which audiences do need to be satisfied -- and in what proportion -- for the deal to be approved, closed and successfully integrated. Clearly identify the rationale for the deal, prepare supporting data and insights, and eliminate uncertainty whenever possible. Once announced, execute on a well-thought-out strategy to communicate clearly, consistently, honestly and often.

Just what the future holds for a merged Burger King and Tim Horton’s remains to be seen. Yet so far, those involved with the deal appear to be doing a capable job of staying on message. There’s a long way to go before this transaction closes, so we’ll be watching along with U.S. and Canadian politicians, regulators and taxpayers, buyer and seller shareholders, and as one newspaper reported, throngs of coffee lovers demanding: “Don’t mess with our Timmy’s.”