Whopper-slinging fast food chain Burger King is in talks to buy Tim Hortons, the Canadian chain known for its coffee and doughnuts. According to the New York Times, the deal would "create one of the world's biggest fast-food businesses" which the Chicago Tribune estimates would have a "market capitalization of roughly $18 billion." If the deal goes through, it would mean that Burger King would move its headquarters to Canada.
Expected terms of the buyout include that Burger King would create a "new corporate parent" company that would encompass both companies. Both Tim Hortons and Burger King would still operate as "standalone brands," according to a press release (below), but both would benefit from "shared corporate services." This new company would be the "world's third-largest quick service restaurant company" with over 18,000 restaurants in 100 countries.
Through the merger, the companies hope to "accelerate Tim Hortons grown in international markets." Reuters points out that another added benefit of the merger would be that Burger King would be able to pay "lower overall corporate taxes" thanks to the move to Canada. A source tells the New York Times that a deal could be finalized "as soon as this week" which means chicken fries could very well soon be a Canadian export. See the press release:
Tim Hortons and Burger King Confirm Talks
In response to media reports, Tim Hortons Inc. (THI: TSX; NYSE) and Burger King Worldwide Inc. (BKW: NYSE) today 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 headquartered in Canada, the largest market of the combined company.
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. 3G Capital and its affiliates have a demonstrated track record of managing international expansion of iconic brands around the globe.
Within this new entity, Tim Hortons and Burger King would operate as standalone 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. Tim Hortons and Burger King each have strong franchisee networks and iconic brands that are loved by their respective consumers. Any transaction will be structured to preserve these relationships and deepen the connections each brand has with its guests, franchisees, employees and communities.
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.
· Burger King in Talks to Buy Tim Hortons [Reuters]
· Burger King in Talks to Buy Tim Hortons and Move to Canada [NYT]
· Burger King, Tim Horton Shares Spike [Chicago Tribune]
· Tim Hortons and Burger King Confirm Talks [Press Release]
· All Burger King Coverage on Eater [-E-]
· All Tim Hortons Coverage on Eater [-E-]