Ackman’s Pershing Square Makes $203 Million on Burger King

Aug 25, 2014 4:42 pm ET

(Updates with closing share price in third paragraph.)

Aug. 25 (Bloomberg) -- Bill Ackman’s two-year bet on Burger King Worldwide Inc. is paying off as the U.S. fast-food chain soared in trading.

Pershing Square Capital Management LP’s 10.9 percent stake in Burger King increased in value today by $203 million to about $1.24 billion, according to data compiled by Bloomberg. Ackman helped Burger King go public in 2012 after it merged with Justice Holdings Ltd., a special-purpose acquisition company co- founded by the hedge-fund manager. The stock has more than doubled since September 2012 when Ackman disclosed Pershing Square’s stake.

Burger King rose 20 percent to $32.40 in New York after disclosing that it’s in talks to buy Tim Hortons Inc. and move its headquarters to Canada, which has a lower tax rate. This would create the world’s third largest fast-food chain with about $22 billion in sales and more than 18,000 restaurants in 100 countries, according to a statement today from the two companies.

“A key driver of these discussions is the potential to leverage Burger King’s worldwide footprint and experience in global development to accelerate Tim Hortons growth in international markets,” according to the statement.

3G Capital, the majority owner of Miami-based Burger King, would own most of the shares of the new company.

Valeant Deal

Ackman is behind another deal that would benefit from Canada’s lower tax rate. Pershing Square is teaming with Valeant Pharmaceuticals International Inc., based in Laval, Quebec, to attempt a hostile takeover of Irvine, California-based Allergan Inc. As part of the deal, which has so far been opposed by Allergan, Valeant plans to move the target’s tax domicile north of the border.

Pershing Square, which oversees $15 billion, has gained 26 percent this year through July in its main hedge fund, profiting from investments including Fannie Mae and Freddie Mac shares and on its bet against Herbalife Ltd.

Francis McGill, a spokesman for Pershing Square at Rubenstein Associates Inc., had no immediate comment.