Burger King Worldwide is working on a deal to buy the Canadian doughnut chain Tim Hortons and form a new publicly listed company based in Canada to execute a tax inversion.
Burger King (NYSE: BKW) started talks with Tim Hortons some weeks ago and could see special value in the Canadian chain’s high-margin coffee offerings, and following a similar path as fast-food rival McDonald’s (NYSE: MCD), which has made a concerted effort to push its own McCafe coffees. As the talks currently stand, the new company would continue to operate the two chains as separate brands after any deal, but they would share corporate services.
By moving to a lower-tax jurisdiction, inversion deals enable companies to save money on foreign earnings and cash stowed abroad, and in some cases lower their overall corporate rate. Still, The Wall Street Journal reports that there’s no assurance a deal will happen.
The new company would have 18,000 restaurants in 100 countries with about $22 billion in sales. Burger King majority owner 3G Capital would continue to own the majority of shares of the new company, with the remainder held by shareholders of Tim Hortons and Burger King.
Shares of Burger King Worldwide were up $2.14 cents, or 7.89 percent, to $29.25 in pre-market trading on Monday. The stock closed Friday at $26.84.
