27 Aug 2014 Burger King to buy Canada’s Tim Hortons, moves HQ to Canada

Burger King delivered Uncle Sam a real Whopper this week. It announced that it was buying Canadian doughnut outfit Tim Hortons in a move widely seen as a bid to lower its tax bills.

The Miami-based burger chain will plunk down $11-billion — some of it from billionaire Warren Buffett — to buy the iconic Canadian chain, and the new fast food behemoth will be headquartered in Ontario.

The move will create the world’s third-largest fast food chain and signals BK’s strong play to capture breakfast and coffee customers who typically flock to McDonald’s and Starbucks.

The purchase brings Burger King the biggest seller of coffee and doughnuts in Canada, which it can use to grow internationally. The deal also lets the burger chain push into the grocery business by selling packaged coffees at supermarkets in North America. The combined business would create a fast-food network with $23-billion in sales, including franchisees, and more than 18 000 restaurants in 100 countries.
With the deal, Burger King announced its new headquarters would be located in Hortons’ home of Oakville, Ontario.

But the deal also appeared to be a ploy to lessen Burger King’s tax burden, a so-called tax inversion strategy that has been criticised by President Obama and Congressional leaders.

Setting up shop in Canada will allow Burger King to pay Canada’s friendly 26% corporate tax rate, a steep break from the US’ nearly 40% rate, Forbes reported.

In the run-up to the deal, Burger King’s parent company said its flagship restaurant brand, which operates 14,000 locations, and the Tim Horton brand would be run independently, and Burger King’s operations would remain in Miami.
Billionaire financier and Berkshire Hathaway chief Warren Buffett is putting up $3 billion to help finance the deal. The Omaha mogul was expected to receive preferred stock in exchange for the cash, but would have no hand in the new company’s day-to-day doings.