Tim Hortons (THI)

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Taggart
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Re: Tim Hortons (THI)

Post by Taggart »

snowback96 wrote:
Taggart wrote:No plans here to hang on if any merger or buyout deal gets accepted between the parties involved. Personally I'm hoping the said talks collapse. There's not all that many great dividend growth choices in the Canadian consumer discretionary market to replace THI with, especially in this hot market.
Why do you need to sell and then replace it? Keep in mind that the combined entity will end up as a "Canadian" company paying dividends eligible for the dividend tax credit. It's weight will also increase in the TSX indices. For whatever it's worth, I am not planning to sell. This is the "hold" part of my buy & hold strategy.
Well now that I know that it is both 3G and Buffett involved in the deal, if it turns out to be similar to the Heinz buyout, then this does not look good for investors who want to continue holding onto THI for hopefully, many years to come. Anyhow, I'm in no rush. I'll see how this all unfolds over the next few weeks to come. The final results will also determine whether or not a replacement will be necessary or not for the Canadian consumer discretionary sector of my own portfolio.
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scomac
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Re: Tim Hortons (THI)

Post by scomac »

Burger King, Tim Hortons ink merger deal for $12.5-billion
Tim Hortons investors will receive C$65.50 in cash and 0.8025 a share of the combined entity for each share they own, the companies said in a statement today. The price deal values each Tim Horton share at C$94.05 based on Burger King’s closing price yesterday, according to the statement.
Ahem; looks like I was a wee bit premature with my pronouncements to sell on the news yesterday, but I stand behind the position to sell rather than go along for the ride. :oops:
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Re: Tim Hortons (THI)

Post by JaydoubleU »

Bloody hell, I'll have to add Timmy's to the long list of "wish I hads" :cry:

But congrats to those who got it at the IPO!
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Re: Tim Hortons (THI)

Post by OnlyMyOpinion »

by scomac » 26 Aug 2014 04:22 "Ahem; looks like I was a wee bit premature with my pronouncements to sell on the news yesterday, but I stand behind the position to sell rather than go along for the ride."
To clarify - I sold yesterday without the influence of your comments. No regrets at this end, 25%ann over 8 yrs plus dividends. Let the next shareholder make some money too.
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Re: Tim Hortons (THI)

Post by Taggart »

Since the agreement has been reached, I really don't have any great ambition to own the new combined equity.
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snowback96
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Re: Tim Hortons (THI)

Post by snowback96 »

With the cash option price set at $88.50 CAD, anything above that price seems like a reasonable target to sell at.

(I must admit that with this morning's official announcement and the extra pop in price, I am having second thoughts on my initial instincts to hold.)
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Re: Tim Hortons (THI)

Post by AltaRed »

scomac wrote:
Tim Hortons investors will receive C$65.50 in cash and 0.8025 a share of the combined entity for each share they own, the companies said in a statement today. The price deal values each Tim Horton share at C$94.05 based on Burger King’s closing price yesterday, according to the statement.
Ahem; looks like I was a wee bit premature with my pronouncements to sell on the news yesterday, but I stand behind the position to sell rather than go along for the ride. :oops:
There are a lot of potential derailments along the way. Even the cash offer of $88.50 could fall by the wayside. Shareholders could derail it and the White House/Congress could do something stupid. I would have sold on the news as well....with no regrets. A bird in hand......
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like_to_retire
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Re: Tim Hortons (THI)

Post by like_to_retire »

snowback96 wrote:With the cash option price set at $88.50 CAD, anything above that price seems like a reasonable target to sell at.

(I must admit that with this morning's official announcement and the extra pop in price, I am having second thoughts on my initial instincts to hold.)
Yeah, that $88.50 cash valuation is insane, something around a P/E of 29. Those tax breaks must be enormous.

I'm pleased with my 80% capital gain. heh, the moneys already re-invested.

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Re: Tim Hortons (THI)

Post by snowback96 »

Most of the criticism about so-called tax inversions has been that they can be done with as little as 20% foreign ownership. I think the half-baked proposals to stop inversions centre on requiring at least 50% of the ownership to be in foreign hands.

The folks at 3G structured this smartly... they will control 51% of the new combined entity. So with over 50% of the ownership being in foreign hands, it will make it much more difficult for Obama and congress to do much (although they will probably try).
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Re: Tim Hortons (THI)

Post by DenisD »

Out at 89.25. Probably would have sold yesterday. But I left for hiking before I heard about it. :D Held THI in my Canadian large cap screen.
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Re: Tim Hortons (THI)

Post by kcowan »

There may be more than a 20% drop in corporate tax rates (35% to 15%), because Canadian companies have more ability to funnel profits through foreign companies, as this article from the Globe and Mail points out:

Globe article outside paywall
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Re: Tim Hortons (THI)

Post by Flaccidsteele »

OnlyMyOpinion wrote:by Flaccidsteele » 25 Aug 2014 12:26 "In the past I made this mistake as well."

Thanks, now I don't feel like such a dummy. Any suggestion on where I should redeploy the proceeds?
Why would you sell before the consummation of the merger if you didn't know what you were going to do with the proceeds? On the surface that doesn't seem to make sense.
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Re: Tim Hortons (THI)

Post by randomwalker »

Flaccidsteele wrote:
OnlyMyOpinion wrote:by Flaccidsteele » 25 Aug 2014 12:26 "In the past I made this mistake as well."

Thanks, now I don't feel like such a dummy. Any suggestion on where I should redeploy the proceeds?
Why would you sell before the consummation of the merger if you didn't know what you were going to do with the proceeds? On the surface that doesn't seem to make sense.
I think I'd sell here to protect my gain against the deal falling apart. I remember selling bce into the teahcer's offer only to buy it back later when teachers walked away. G3 has paid (over paid???) quite a bit for Tim Hortons and the success of an expansion is not guaranteed.
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Re: Tim Hortons (THI)

Post by AltaRed »

randomwalker wrote:I think I'd sell here to protect my gain against the deal falling apart. I remember selling bce into the teahcer's offer only to buy it back later when teachers walked away. G3 has paid (over paid???) quite a bit for Tim Hortons and the success of an expansion is not guaranteed.
:thumbsup: Gift horses (speculative premiums) are only around so long before the euphoria disappears. There is already some 'scratching of the head' by many of just what this is going to deliver. Based on analysis I have seen and read as of last night, there isn't much in the way of tax benefits after all and there may well be a falling out of customer loyalty on both sides of the border, albeit for different reasons. Me thinks there is plenty of opportunity and time to re-engage at much lower price over the course of the next year.... never mind other investing opportunities altogether.
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Re: Tim Hortons (THI)

Post by like_to_retire »

AltaRed wrote:.........there isn't much in the way of tax benefits after all
I think back to the time when Michael Ignatieff was running for the Liberals and one of his platforms was that he would immediately roll back all the corporate tax cuts since 2010. I haven't heard what their brilliant new leader is planning on doing, but the excellent corporate tax rate presently enjoyed may not last past the next election. I wonder if the deal makers considered that?

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Re: Tim Hortons (THI)

Post by Shakespeare »

Please leave political opinions in the Watercooler.
Sic transit gloria mundi. Tuesday is usually worse. - Robert A. Heinlein, Starman Jones
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AltaRed
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Re: Tim Hortons (THI)

Post by AltaRed »

Shakespeare wrote:Please leave political opinions in the Watercooler.
I agree but the point about uncertainty of the direction of tax rates, whoever is in power, is a valid concern. Some US corporate inversions have used Ireland as the basis of re-incorporation to take advantage of the low corporate tax rates there. Things might change there too. To me, there has to be more in a major corporate transistion than just current tax benefits.
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Re: Tim Hortons (THI)

Post by Flaccidsteele »

randomwalker wrote:
Flaccidsteele wrote:
OnlyMyOpinion wrote:by Flaccidsteele » 25 Aug 2014 12:26 "In the past I made this mistake as well."

Thanks, now I don't feel like such a dummy. Any suggestion on where I should redeploy the proceeds?
Why would you sell before the consummation of the merger if you didn't know what you were going to do with the proceeds? On the surface that doesn't seem to make sense.
I think I'd sell here to protect my gain against the deal falling apart. I remember selling bce into the teahcer's offer only to buy it back later when teachers walked away. G3 has paid (over paid???) quite a bit for Tim Hortons and the success of an expansion is not guaranteed.
Even if the deal fell apart, an individual who owns shares in a good business would still end up owning shares in a good business.

The deal, in and of itself, shouldn't really change the quality of the business.

And furthermore, if there are no ideas for the proceeds of the money, then the decision to sell makes it even more confusing to me.

(It would actually make more sense if a shareholder said that they were selling because they always wanted to buy a Bentley, or take a cruise around the world, or pay their child's wedding, or whatnot. Because they just wanted to spend the money that way. But to sell just to sell; for no apparent need for money or any other reason, just seems...strange)

Anyway, selling is just not something that I'm used to doing unless the business is really (really) falling apart. Compounding over time has just been way too big a benefit for me. To each their own.
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Re: Tim Hortons (THI)

Post by like_to_retire »

Flaccidsteele wrote:The deal, in and of itself, shouldn't really change the quality of the business.
I would agree with your reasoning except for the case where a company merges with another and the buyout price raises the P/E to ridiculous valuations that don't support that price. Most people would take their money and run while scratching their heads. Why would you not?
Flaccidsteele wrote:Even if the deal fell apart, an individual who owns shares in a good business would still end up owning shares in a good business.
Sure, if the valuation was reasonable. Do you feel THI is worth $89?

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Re: Tim Hortons (THI)

Post by DenisD »

If the deal falls apart, I'll repurchase THI at the next screen refresh if it's ranked high enough. And the price will probably be less than $89.25.
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Re: Tim Hortons (THI)

Post by Flaccidsteele »

like_to_retire wrote:
Flaccidsteele wrote:The deal, in and of itself, shouldn't really change the quality of the business.
I would agree with your reasoning except for the case where a company merges with another and the buyout price raises the P/E to ridiculous valuations that don't support that price. Most people would take their money and run while scratching their heads. Why would you not?
Flaccidsteele wrote:Even if the deal fell apart, an individual who owns shares in a good business would still end up owning shares in a good business.
Sure, if the valuation was reasonable. Do you feel THI is worth $89?
THI has never been an interest of mine. I have no idea what THI is worth.

All holdings in my portfolio have gone through periods of being overvalued. All good businesses go through periods of being overvalued. That's not particularly interesting to me.

All I am saying is that, speaking only for myself, I have done financially better with businesses that I have held and allowed to compound, than with businesses whose stocks that I sold.

Also, again speaking only for myself, furthermore it doesn't make sense to me to sell and obtain cash when I don't even have a need or use for it?
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Re: Tim Hortons (THI)

Post by Shine »

Politicians on both sides of the border have arrived.

I say take the money and run, come back later if the valuations so suggest.

IMHO
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Re: Tim Hortons (THI)

Post by like_to_retire »

Flaccidsteele wrote: furthermore it doesn't make sense to me to sell and obtain cash when I don't even have a need or use for it?
I wish they had an icon for gobsmacked. :shock:

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Re: Tim Hortons (THI)

Post by kcowan »

like_to_retire wrote:
Flaccidsteele wrote: furthermore it doesn't make sense to me to sell and obtain cash when I don't even have a need or use for it?
I wish they had an icon for gobsmacked. :shock:

ltr
THI was part of my dividend portfolio. The proceeds are earmarked for purchase of more Canadian dividend payers at a later time. I sold because I do not think the company is worth that much and I do not want to own BKW.

Here is an article on the merger.
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