What to do with Tims

Article Excerpt

TIM HORTONS $88.70 (Toronto symbol THI; TSINetwork Rating: Average) (905-845-6511; www.timhortons.com; Shares outstanding: 132.8 million; Market cap: $11.8 billion; Dividend yield: 1.4%) has accepted a friendly takeover offer from Burger King Worldwide (New York symbol BKW). Tim Hortons shareholders can opt to receive $88.50 a share in cash or 3.0879 Burger King shares (currently worth $105.54). Burger King will limit the overall cash payout, so most investors will likely receive $65.50 in cash and 0.8025 of a share, for a total value of $90.54. Investors who hold their shares outside of RRSPs and other registered accounts will be liable for capital gains taxes. Burger King is taking on a lot of debt to pay for this purchase,. As well, the deal may face U.S. regulatory hurdles. We feel most investors should select the all-cash option, even though they’ll probably receive some Burger King shares. We haven’t recommended Burger King, but we see it as a hold. If you need to…