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Burger King and Tim Hortons Cooking Up a Merger

Combined Firms Would Operate 18,000 Locations Worldwide
August 25, 2014
Tim Hortons Inc. and Burger King Worldwide Inc. confirmed that they are in discussions regarding the potential creation of a global leader in the quick service restaurant business. The new publicly-listed company would be based in Canada, the largest market of the combined company.

The deal could be considered a corporate inversion in which the Miami-based Burger King would acquire the Ontario, Canada-based Tim Hortons and re-domicile outside of the U.S. with an outcome of lowering their overall corporate taxes.

According to accounting firm, KPMG Canada has a corporate tax rate of 26.5%. That compares to the 35% federal income tax Burger King reported in its latest quarterly report.

Brazil-based 3G Capital, the majority owner of Burger King, will continue to own the majority of the shares of the new company on a pro forma basis, with the remainder held by existing shareholders of Tim Hortons and Burger King.

Within this new entity, Tim Hortons and Burger King would operate as stand-alone brands, while benefiting from shared corporate services, best practices and global scale and reach.

A key driver of these discussions is the potential to leverage Burger King's worldwide footprint and experience in global development to accelerate Tim Hortons' growth in international markets.

The new company would be the world's third-largest quick service restaurant company, with approximately $22 billion in system sales and over 18,000 restaurants in 100 countries worldwide.

As of June 29, 2014, Tim Hortons had 4,546 system-wide restaurants, including 3,630 in Canada, 866 in the United States and 50 in the Gulf Cooperation Council (Cooperation Council for the Arab States of the Gulf).

Burger King is the second largest fast food hamburger chain in the world operating over 13,000 locations in 98 countries.

The transaction remains subject to negotiation of definitive agreements. There can be no assurance that any agreement will be reached or that a transaction will be consummated.

Tim Hortons and Burger King do not intend to comment on this matter further unless and until a transaction is agreed or discussions are discontinued, and specifically disclaim any obligation to provide further updates to the market.

In separate Burger King news, Carrols Restaurant Group Inc. in Syracuse, NY, signed agreements to purchase 64 Burger Kings in Tennessee, Indiana and Illinois from Heartland Food LLC for $18 million excluding inventory.

The restaurants to be acquired are in or around the following markets: Nashville, TN (27 restaurants), Springfield, IL (11), Terre Haute, IN (15), Evansville, IN (seven), and other nearby markets (four).

“The consummation of this transaction will expand our footprint to a number of markets contiguous to our existing operations,” said Daniel T. Accordino, Carrols’ CEO.

The expected closing will bring Carrols’ total 2014 acquisitions to almost 100 restaurants and it is continuing to evaluate additional opportunities.

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