Tim Hortons and Burger King in merger talks

(Update)
There’s a whopper of a deal in the works in the fast food industry. Burger King is looking to buy Tim Hortons and all day there’s been strong reaction to the news.

It’s been a busy day on the stock market as shares in both companies have increased dramatically. Burger King’s shares went up 19.5% while Tim Hortons jumped 19 per cent. Both parties are calling this tentative deal the creation of a global leader in the quick service restaurant business, with each side looking to take a big bite out of that industry.

The king of burgers is looking to expand its kingdom. Fast food giant Burger King has confirmed it is in talks with Tim Horton’s to buy Canada’s iconic donut and coffee chain. Combining these two restaurant titans would result in the world’s third largest quick service restaurant company.

Mandeep Malik with McMaster’s School of Business says it would also help to grow Timmies international footprint: “The value for Tim Hortons is leveraging the international exposure of Burger King. Looking at operational efficiencies, what can they learn about the food business.”

Currently, Tim’s has only a handful of international locations whereas Burger King operates 13-thousand.

The chains would continue to operate individually, but under the same owner and the new company created by the deal would be headquartered in Canada. It’s a move that would give a big tax break to Burger King.

Mandeep Malik: “Corporate taxes in the U.S. are 40%. Corporate taxes in Canada are 26%. So if the holding company is based out of Canada, the tax rates are much lower.”

This wouldn’t be the first time an American company has taken over Timmies. Back in 1995, Wendy’s bought it. They parted ways a decade later when Tim Hortons spun off the franchise. The prospect of another U.S. takeover has politicians throwing in their two cents.

Peggy Nash, NDP industry critic: “If Burger King does buy Tim Hortons it will be a whopper of a business deal. The question is, will Canadians get more than a Timbit of information in transparency and that’s what we’ll be fighting for in the House of Commons.”

Giving Canadians some food for thought in the coming days.

Burger King’s biggest shareholder is an investment company called 3G which recently bought Heinz with the help of Warren Buffet. If this deal goes through, it would result in the new company owning a collective 18-thousand restaurants in 100 countries, with annual sales reaching 22 billion dollars. A super power in the fast food business to be reckoned with for sure.