Tim Hortons being acquired . . . by Burger King

[Lady tehMa]

http://www.castanet.net/news/Business/121580/Tim-Hortons-Burger-King-confirm-talks-for-potential-strategic-transaction

Tim Hortons, Burger King confirm talks for potential 'strategic transaction'
by The Canadian Press | Story: 121580 - Aug 24, 2014 / 7:14 pm

OAKVILLE, Ont. - Burger King is in talks to buy Tim Hortons Inc. (TSX: THI) and form a new publicly listed company that would be based in Canada.

They said in a statement Sunday night that Canada would be the largest market of the combined company.

The statement said 3G Capital, the majority owner of Burger King, would 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.

The companies say Ontario-based Tim Hortons and Miami-based Burger King would operate as standalone brands.

The statement adds that the new corporation 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.

The companies say they will not comment further unless there is a deal.

Excuse the use of all caps, but THE HORROR! D:

[Iamsomeone]

Burger King? How odd.

I wonder if Timmy's stock prices have fallen today. The undying (free) support they get from Canadian's, because we see it as an all Canadian company, will go out the window if they align with Burger King, IMO.

[matai]

*removed*

[oneh2obabe]

Burger King? How odd.

I wonder if Timmy's stock prices have fallen today. The undying (free) support they get from Canadian's, because we see it as an all Canadian company, will go out the window if they align with Burger King, IMO.

Being bought by an American company might seem like an odd move for a Canadian retail icon like Timmy’s, it wouldn’t be the first time a U.S. firm ran the coffee giant.

In 1995 Tim Hortons was purchased by Wendy’s International Inc. for $400 million. Even after it was spun off by Wendy’s in 2006, it remained incorporated in Delaware. It wasn’t until 2009 that it moved its corporate headquarters to Oakville and reclaimed its legal status as a Canadian company.

[Lady tehMa]

Yeah, but Wendy's is passable fast food. Burger King . . . *shudders*

[BoB76]

I wonder if they'll make a burger using a donut bun instead of a traditional one? I like donuts with sprinkles so hopefully that'll be an option.

[oneh2obabe]

The tentative deal appears to be a so-called tax inversion scheme, an increasingly common legal manoeuvre that allows U.S. corporations to take on the nationality, and lower tax burden, of another country by buying a company there. The U.S. Congress has recorded 47 major American companies using “inversion” in the last decade.

Bottom line ... buying Tim Hortons means Burger King stands to pay a 15% corporate tax rate rather than the 35% they would owe the U.S. government.

[Lady tehMa]

Hm - that is interesting. I just hope it won't affect our Timmies :(

[matai]

Another sad loss for West Kelowna. Lots of franchises are combined with Wendy's. If the burger makeover comes true, either Tim or Wendy's will have to move out I guess....

And as for being Canadian, well.... I'm ok to convert an american corporation to canadianism. It means BK will become canadian.

[Glacier]

Wendy's is no longer the owner of Tim Hortons. This deal will not effect Tim Hortons at all. The ONLY reason the companies are merging is so that Burger king won't have to pay the USA corporate tax rate. Instead, they will be paying the Canadian tax rate which is about half that of the USA by moving their headquarters to Canada. Obama is going to try and stop this deal for sure.

[Iamsomeone]

I'd completely forgotten that Wendy's once bought out Tim Horton's. Canadian loyalty never wavered then so I guess it shouldn't with this purchase either.

I can see why Obama is concerned about all these companies moving to other countries like Canada. They have a lot to lose.

Bottom line ... buying Tim Hortons means Burger King stands to pay a 15% corporate tax rate rather than the 35% they would owe the U.S. government.

The tax savings only amount to about 9% after the provincial corporate tax is added. Still, 9% of all that revenue adds up. It's a good move for Burger King.

"Canada's federal corporate tax rate is 15 per cent, and Ontario currently tacks on another 11.5 per cent, putting the total tax bill for a company residing in Ontario at 26.5 per cent." Source: http://www.cbc.ca/news/business/tim-hor ... -1.2745754

[Glacier]

The tax savings only amount to about 9% after the provincial corporate tax is added. Still, 9% of all that revenue adds up. It's a good move for Burger King.

You are forgetting about the NY State corporate rate of 7.1%. The means the difference is 16%, not 9%.

[oneh2obabe]

Tax inversions are a form of tax avoidance. They are driven by a combination of factors, but the most prevalent factor is that the U.S. tax code (unusual amongst developed nations) seeks to impose income tax on profits earned abroad by American corporations. This creates a strong incentive for American companies with large overseas markets to seek to recharacterise themselves as a foreign corporation if they want to return foreign earnings to stockholders without double taxation.

It's estimated that U.S. multinational corporations now have about $1 trillion hoarded overseas which isn't subject to corporate taxation unless they transfer it to the U.S.

[Iamsomeone]

Wow, a trillion dollars hoarded overseas is huge. The US government is right to be concerned.

You are forgetting about the NY State corporate rate of 7.1%. The means the difference is 16%, not 9%.

I didn't know that. Thanks Glacier.

[Gilchy]

The US is one of two countries in the world that taxes worldwide income, which is increasingly creating issues for individuals and corporations alike. Ask the 1 million "US persons" living in Canada who technically still owe the US income tax every year.