Burger King Goes Canadian With $11B Tim Hortons Buy

Merger would move company's base, save a bundle in taxes

By Rob Quinn,  Newser Staff

Posted Aug 26, 2014 1:16 AM CDT | Updated Aug 26, 2014 7:18 AM CDT

(Newser) – Burger King is confirming an $11 billion buy of Canada's iconic Tim Hortons coffee chain that will create Earth's third-biggest fast-food company and settle its headquarters in Canada—where corporate tax rates are conveniently around 26%, compared to a basic rate of 35% in the US. The merger looks like a "tax inversion" play, an analyst tells the CBC, explaining that when an American firm merges with a Canadian one, it can sometimes "technically set up [its] headquarters in Canada, even though you still keep everybody in the United States. It's almost like a mailing address more than anything else." Burger King will still run its business from Miami, notes the AP.

But there could be a lot more than tax savings to the deal, the New York Times reports. The merger would give Tim Hortons huge opportunities for overseas expansion and would boost Burger King's coffee and breakfast offerings; the combined chain would have 18,000 locations. Tim Hortons was owned by Wendy's for years, until 2006, but some Canadians worry that the new deal will end up diluting the chain's Canadian-ness. "You know, Tim's is already pretty corporate," a customer at a Toronto outlet tells the Toronto Star. "But it still does have that nice Canadian vibe."

A Burger King sign and a Tim Hortons sign are displayed in Ottawa, Ontario.
A Burger King sign and a Tim Hortons sign are displayed in Ottawa, Ontario.   (AP Photo/The Canadian Press, Sean Kilpatrick)
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