|08-25-2014, 01:19 PM||#1|
Burger King, Tim Hortons to Merge in a ‘Tax Inversion’ Deal
Burger King, the second-largest U.S. burger chain, is in talks to buy Tim Hortons Inc. and form a new publicly listed company that would be based in Canada, becoming the latest American company to seek relocation to a lower-tax country.
Fast food chain Burger Kind is officially in talks to buy the Canadian coffee-and-doughnut chain Tim Hortons in a massive merger that would create an $18 billion company with an artificially low tax bill.
Burger King’s majority owner 3G Capital, a New York-based investment firm with Brazilian roots, which acquired the then struggling Burger King in 2010 for about $3.3 billion, would continue to own the majority of shares of the new company, with the remainder held by shareholders of Tim Hortons and Burger King.
Burger King, founded in 1954 and headquartered in Miami, Florida, operates over 13,000 locations in nearly 100 countries and territories across the globe. It has a market capitalization of about $9.55 billion.
According to the proposed deal, Miami-based Burger King Worldwide Inc. and Ontario-based Tim Hortons Inc. would continue to operate as separate brands but would share corporate services.
Most tax-inversions have involved large U.S. companies buying substantially smaller foreign companies. In this case Burger King and Tim Horton’s are fairly comparable in size.
This kind of merges is called a tax inversion deals which are made to avoid higher U.S. taxes and save money on foreign earnings and cash held outside the U.S.
If a deal gets sealed, the new corporation would be the world`s third-largest quick service restaurant company, with approximately $22 billion in system sales and more than 18,000 restaurants in 100 countries worldwide.
As of 20:04 ET on Friday, BKW Worldwide Inc. stocks traded higher by 1.01% or 0.2700 points to $27.11.
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