Billionaire investor Warren Buffett has defended his participation in Burger King's takeover of Canadian doughnut and coffee chain Tim Hortons after coming under fire for financing what critics described as tax-dodging.
The Oracle of Omaha came out fighting on Tuesday just hours after the $11 billion deal was announced, arguing that Tim Horton's Canadian heritage as one of the country's most successful companies was the main reason for the move, not tax.
"Tim Hortons earns more money than Burger King does," he told the Financial Times. "I just don't know how the Canadians would feel about Tim Hortons moving to Florida. The main thing here is to keep the Canadians happy."
Buffett's Berkshire Hathaway provided $3 billion in financing for the deal that will see Miami-based Burger King relocating its headquarters to Canada, where corporate tax is lower. The so-called inversion deals allow American companies to move their headquarters to a country with a lower tax rate by acquiring or merging with a foreign company.
Confirming the deal, Burger King said Mr Buffett's Berkshire Hathaway's role would be limited to providing financing, adding that he "will not have any participation in the management and operation of the business".
However, American politicians, including the highly influential and outspoken senator Carl Levin, were quick to criticise Burger King for "renouncing its citizenship" for tax purposes. Meanwhile, Democrat senator Sherrod Brown went as far as calling for a boycott of Burger King accusing the chain of "abandoning" its customers.
The deal also puts Buffett, who is known for "ethical" take on capitalism, on the hot seat after he recently spoke against tax inversion and described it as "a little annoying when we see businesses paying lower rates while engaging in the same businesses that we are engaged in."
He also supported President Barack Obama in the 2008 presidential elections and was an advocate of the so-called "Buffett Tax" which argued the highest earning Americans should pay a 30 per cent tax.
Yesterday, the White House refused comment directly on the deal, but a spokesman reiterated that president Obama generally believes it is unfair for companies to pursue a tax inversion merely to pay less in taxes.