Burger King, Tim Hortons discuss merger

BURGER King, the home of the Whopper, is negotiating with doughnut and coffee chain Tim Hortons for a possible merger. The agreement could be finalised this week, according to a report by the New York Times, and could create one of the world’s biggest fast-food businesses with a market value of about $22 billion and more than 18,000 restaurants globally.

The terms of the deal include the creation of a new corporate parent that would house both chains and yet would run independently.  This new entity would be able offer an expanded menu spanning breakfast, lunch, dinner, and snacks, allowing parent companies Burger King and Tim Hortons to grow even faster and compete more aggressively with McDonald’s and Yum Brands, owner of Taco Bell and KFC. Further, Burger King can leverage Tim Hortons’s coffee products whilst helping the latter expand in the U.S. and overseas. 

The agreement would also allow Burger King to move its corporate headquarters to Canada. Reuters notes that one key reason for this relocation is to avoid double taxation on profits earned overseas. The federal corporate tax rate in the U.S. is 35 percent compared with 15% in Canada. A growing number of companies, including Pfizer and AbbVie, are turning to corporate inversion to reduce taxes, a move that is drawing criticism from the Obama administration and some lawmakers.