Burger King Worldwide Inc (BKW) & Tim Hortons Inc. (USA) (THI) In Talks Over Tax Inversion Merger Deal

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Burger King Worldwide Inc (NYSE:BKW), the American fast food giant, and Tim Hortons Inc. (USA) (NYSE:THI), the Canada based coffee and donut shop, announced on Sunday that a possible merger between the two companies is being discussed. Jonathan Ferro reported the merger on Bloomberg’s ‘On The Move’ earlier today.

Burger King

“[…] American fast food giant Burger King Worldwide Inc (NYSE:BKW) is in talks to buy the Canadian coffee and donut chain Tim Hortons Inc. (USA) (NYSE:THI) and move its headquarters to Canada,” said Ferro.

Burger King is the latest in the line of American companies attempting tax inversion deals in order to cut taxes and save money by moving their headquarters out of the United States. Higher taxes in the United States and lower interest rates abroad have driven several companies to consider such deals. The increasing frequency of such tax inversion deals has even attracted the notice of United States President Barack Obama who called them the “herd mentality” of companies and criticized them.

The idea behind the merger is to create a mutually beneficial entity with shared corporate services while maintaining their unique brand images. Tim Hortons Inc. (USA) (NYSE:THI), with a market cap of $8.4 billion, would use Burger King Worldwide Inc (NYSE:BKW)’s expertise to put its floundering international expansion plans back on track while the latter would reap the cost benefits of moving its domicile out of the United States. Burger King’s current market cap stands at about $9.55 billion.

If the deal materializes, the resultant company would be a formidable quick service restaurant with Burger King Worldwide Inc (NYSE:BKW) operating over 13,000 outlets across approximately 100 countries and Tim Hortons Inc. (USA) (NYSE:THI) with 3,500 restaurants in Canada and 850 outlets in the United States.

“The merger would create the world’s third largest fast food chain with more than$22 billion in annual sales,” Ferro noted.

Disclosure: none

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