Burger King Worldwide Inc (BKW) and Tim Hortons Inc. (USA) (THI) Planning a Merger

Burger King Worldwide Inc (NYSE:BKW) is planning to collaborate with Tim Hortons Inc. (USA) (NYSE:THI) and form an overall market capitalization of $18 billion. Experts are speculating that a lower-tax environment is one of the primary reasons behind this move and Burger King Worldwide Inc (NYSE:BKW) will transfer its headquarters to a lower-taxed Canadian workspace.

If the deal completes successfully, it would be the third-largest fast food service chain with a Canadian base offering comparatively lower corporate taxes. It will be a tax inversion transaction and it will help move Burger King Worldwide Inc (NYSE:BKW) out of the United States. Canada has a corporate tax rate of 26.5 percent as compared to the 40% tax rate in the US.

Burger King (BKW)

The two chains will serve as stand-alone brands only and 3G capital will own the majority shares in the new alliance with remaining shares distributed among the shareholders of Burger King Worldwide Inc (NYSE:BKW) and Tim Hortons Inc. (USA) (NYSE:THI). In addition to a gigantic market capitalization, the combined company will own 18,000 restaurants across 100 countries with expected net sales of $22 billion.

Although, tax inversion deals have received a negative response from the US President, Barack Obama who has even referred these companies as “corporate deserters” on July 24, 2014. It might seem a valid concern because over 21 companies have either announced such deals or completed them to lower down taxes.

Earlier, Burger King Worldwide Inc (NYSE:BKW) announced revenue of $261.2 million with a 0.4% increase in same-store sales in Canada and the U.S. The company gained 1% at the close of trading session on August 22, 2014.

This article has been written by Prakash Pandey and edited by Serkan Unal.

“Burger King Worldwide Inc (BKW) and Tim Hortons Inc. (USA) (THI) Planning a Merger”


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