Burger King’s revolting corporate dream: How they became “citizens of nowhere”

Thursday, Sep 11, 2014 10:37 AM EDT

As the federal government struggles financially and cuts food stamps, here's how great U.S. companies steal from us

Robert Hennelly

Topics: Burger King, inversions, comprehensive tax reform, Taxes, Editor's Picks, Patriotism, Food Stamps, warren buffet, anheuser-busch, U.S. Treasury, Business News, Politics News

 

 (Credit: AP/Jason Decrow)

As Democrats and Republicans continue to heap abuse on one another in Washington, the U.S. corporate tax base continues to show signs of erosion. Under what is shorthanded as an “inversion,” U.S. companies bed down with a foreign partner or takeover target, and live happily ever after, domiciled in a tax friendlier jurisdiction like  Britain, Ireland or even Canada.
In the latest headline-grabbing inversion deal Miami-based Burger King will absorb Tim Hortons, a Canadian coffee and doughnut chain, to create what will be the world’s third-largest fast food global corporation, with more then 18,000 restaurants in 100 countries with  $23 billion in annual sales revenue.
Back in 2010 Burger King  was bought by 3G Capital, a global investment firm, led by 75-year-old Brazilian-Swiss billionaire Jorge Paulo Lemann. Lemann, a Harvard graduate, former journalist and tennis star is ranked by Bloomberg as the 28th wealthiest man in the world, worth about $25.2 billion.
Back in 2008 Lemann and his team put together a $52 billion deal to buy out  Anheuser- Busch, the iconic American beer brand.
Just four years earlier they had parlayed their ownership  of Brazilian beer brands Brahma and Antarctica, which dominated South America,  into becoming a global player with their  takeover of Belgium-based Interbrew, makers of premium brands like Stella and Becks. From there it was just a hop, skip and a multibillion-dollar jump to global beer domination.
Today the world’s largest beer conglomerate is publicly traded as AbInBev. It has 200 beer brands with 150,000 employees based in 24 countries bringing in $40 billion in annual revenue. On its recruiting website a company video says its “dream is to be the best beer company in a better world. Better world is the way AbInBev gives substance to corporate social responsibility. Making a positive contribution to the world around us is crucial if we want our business to be sustainable and profitable in the long run.”
Lemann’s Anheuser Busch conquest was not without controversy and some patriotic hand-wringing over the globalizing of a brand like Budweiser that more than just about any other had wrapped itself up in America’s  sovereign “red, white and blue.” But at $70 a share price offer, there was enough green for stockholders and the Busch family to resign themselves to this new world beer order. The consensus of the business press was that the Anheuser Busch leadership had become complacent and vulnerable to a takeover by Lemann’s A team of cost cutters, who once in control, zeroed out free beer and fancy corporate travel.