Burger King reportedly in talks to buy Tim Hortons

Burger King Worldwide Inc. is looking to buy Tim Hortons Inc., according to reports, a move that would create the third-largest fast food company in the world and mark the second time in as many decades that the iconic Canadian coffee chain was gobbled up by an American burger behemoth.
The Wall Street Journal reported Sunday that the companies were approaching a deal to forge a new holding company based in Canada. Together, the two restaurant titans — one classically American, the other iconically Canadian — are worth about $18 billion.
Tim Hortons could not be reached for comment by press time.
The tentative deal appears to be a so-called tax inversion scheme, an increasingly common legal manoeuvre that allows U.S. corporations to take on the nationality, and lower tax burden, of another country by buying a company there. The U.S. Congress has recorded 47 major American companies using “inversion” in the last decade.
By flying the Maple Leaf rather than the Stars and Stripes, Burger King stands to pay a 15 per cent corporate tax rate, rather than the 35 they would owe the U.S. government.
Buying Tim Hortons would also give the Miami-based based burger chain a boost in the lucrative coffee market, which their chief rival McDonald’s has pursued aggressively.
Burger King has already partnered with the Starbucks-owned Seattle’s Best Coffee to make headway in the high-margin java business.
Although being bought by an American company might seem like an odd move for a Canadian retail icon like Timmy’s, it wouldn’t be the first time a U.S. firm ran the coffee giant.
In 1995 Tim Hortons was purchased by Wendy’s International Inc. for $400 million. Even after it was spun off by Wendy’s in 2006, it remained incorporated in Delaware. It wasn’t until 2009 that it moved its corporate headquarters to Oakville and reclaimed its legal status as a Canadian company.
In recent years, Tim Hortons has expanded rapidly south of the 49th parallel, where it now boasts over 800 restaurants and has plans for 300 more by the end of 2018.
But Canada remains Tim Hortons’ meal ticket. Last year, two U.S. hedge funds announced they had bought stock in the company and urged it to curb its American blitz.
And the company’s most recent American partnership, with the U.S. ice cream company Cold Stone Creamery, has been fraught. In February, Tim Hortons announced it was pulling the dairy outlets from its Canadian restaurants at a cost of some $19 million in the fourth quarter, but keeping the pairing in its U.S. stores.
The bulk of the chain’s business still comes from Canadian customers, who account for 90 per cent of sales. Tim Hortons has over 3,500 restaurants in Canada, with plans for 500 more in the next five years.
The company has a market capitalization of about $8.4 billion.