Shares of Tim Hortons up after report U.S. fund is pushing for changes

TORONTO – Tim Hortons Inc. (TSX:THI) shares closed higher Wednesday after a report that U.S. investment firm Highfields Capital is pushing for changes at the chain, including a big buyback of stock and a spinoff of its real estate holdings.

Reuters news agency, which cited documents and two sources, said Highfields wants the coffee and doughnut chain to borrow $3.4 billion to buy back more than a third of its stock.

Highfields also wants Tim Hortons to create a real estate trust for its real estate assets and spin off or sell its distribution business.

Tim Hortons declined to comment on the report.

“We are focused on continuing our track record of creating shareholder value and always welcome constructive dialogue with our shareholders,” the company said in a statement.

Tim Hortons owns about 20 per cent of its more than 3,400 restaurant locations and kiosks, though most are leased. It also owns corporate headquarters and distribution centres.

The company is scheduled to report its first-quarter results on May 8 and hold its annual meeting on May 9.

Shares in Tim Hortons closed up $2.19 at $56.77 on the Toronto Stock Exchange.

The U.S. investment firm holds a roughly 1.56 per cent stake in Tim Hortons.

Highfields is the latest by a U.S. investment firm to call for a reorganization at a big Canadian company.

Earlier this year, Jana Partners pushed for changes at Agrium Inc. (TSX:AGU) but failed to win seats on the company’s board last month.

However, Pershing Square Capital Management was successful last year in making changes at Canadian Pacific Railway (TSX:CP) that saw the appointment of Hunter Harrison as chief executive.