Ackman's Pershing Square Makes $171M on Burger King Wager

By Joel Cuttiford

Bill Ackman’s two-year investment in Burger King Worldwide is paying off as the fast-food chain soared in trading today.

According to data compiled by Bloomberg, Pershing Square Capital Management LP’s 10.9 percent stake in Burger King increased in value today by $249 million to $1.29 billion.  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.  Since disclosing Pershing Square’s stake in 2012, the stock has more than doubled.

Burger King rose 24 percent to $31.60 in New York upon the announcement that the company is in talks to buy Tim Hortons and move its headquarters to Canada.  The merger stands to yield more than 18,000 restaurants in 100 countries according to a statement 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,” the statement said.

Ackman is also behind another deal that would benefit from Canada’s lower tax rate.  Pershing Square is teaming up with Quebec’s Valeant Pharmaceuticals International Inc. to attempt a hostile takeover of California-based Allergan Inc.  As part of the deal—which Allergan opposes—Valeant plans to move the company’s tax residency up north.

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

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