Burger King in Talks to Buy Tim Hortons
Burger King may be the home of the Whopper, but Canada may be the new home of Burger King.
The restaurant operator said on Sunday that it was in talks to buy Tim Hortons, the Canadian doughnut-and-coffee chain, in a potential deal that would create one of the world’s biggest fast-food businesses.
Under the expected terms of the deal, Burger King would create a new corporate parent that would house both chains, which would be operated independently. Together, the two companies would have a market value of more than $18 billion.
Though the two companies are expected to argue that a merger would bring a host of strategic benefits, it would nevertheless count as a so-called corporate inversion.
Inversions have become increasingly popular, though the practice has come under fire from Washington as the Obama administration and lawmakers have complained that companies that do so are unfairly — though legally — cutting their tax bills.
The American corporate tax rate is about 35%, while Canada’s is about 15%. But people briefed on the deal negotiations said that the main driver in the talks was not taxes.
The two companies are expected to argue that the deal makes sense because it would create a stronger competitor to McDonald’s and Yum Brands, the owner of Taco Bell and KFC.
A takeover of Tim Hortons would be the latest twist in the 60-year-old life of Burger King. Started as a burger joint in Florida, it became a rival to McDonald’s. But it has never surpassed its rival, even after being taken over and reworked by private-equity investors multiple times.
The company operates more than 13,000 locations, almost all of which are run by franchisees.