Burger King Buys Tim Hortons To Cut Taxes

Burger King Buys Tim Hortons To Cut Taxes

Burger King is set to merge with the Tim Hortons restaurant chain. This was revealed recently by the US-based fast-food restaurant. The agreement is worth around $11 billion and will create the third biggest quick service restaurant in the world. The resulting company will have around $23 billion in sales along with over 18,000 outlets around the world.

Although the new company will be based in Canada, the two brands will be under independent management. The US-based restaurant will retain its US office based in Miami.

Since the new headquarters is in Canada, the US tax bill of Burger King is expected to be reduced since total tax costs in Canada is reportedly around 46 percent lower compared to tax costs in the US.

Companies can transfer money earned through sales outside the US to their parent company without having to pay additional US taxes through inversions. Congress and President Barack Obama criticized inversions since it reduces the tax revenue of the US. This comes as more companies have started to take advantage of inversions.

Shareholders of Tim Hortons are expected to receive $65.50 in cash along with 0.8025 of common shares from the new company for every share they own.

3G Capital managing partner Alex Behring said the combination of the two companies will create an international quick service restaurant. 3G Capital is the majority owner of the US-based restaurant chain.

Although Berkshire Hathaway of Warren Buffet committed to finance the deal through preferred equity financing, it will not participate in the operations and management of the business. This was revealed by the two quick service restaurants.

The combined size, industry-leading growth trajectory, and international footprint of the two companies will allow it to deliver excellent value and opportunity to the shareholders of Time Hortons and Burger King, according to the two companies.

Posted by James Fried on Tuesday September 09 2014, 3:31 AM EST. Ref: USA Today. Link. All trademarks acknowledged. Filed under Finance. Comments and Trackbacks closed. Follow responses: RSS 2.0