Burger King has struck a multi-billion deal to buy Tim Hortons, a merger that will create the world's third largest fast-food provider. The new company will operate out of Canada, allowing Burger King to pay lower taxes.
Burger King announced Tuesday it would be buying Canadian rival Tim Hortons for about $11 billion (8.3 billion euros) - a deal that would help the US-based fast-food company secure its foothold in the coffee and breakfast market.
Both chains will continue to be run independently, but the corporate headquarters of the joint company will be based in Canada, helping Miami-based Burger King to pay lower fees with its tax base north of the US border.
Such tax inversions have been criticized by US President Barack Obama and Congress, as theUS government loses out on revenue
The deal will create the world's third largest fast-food company with about $23 billion in sales annually and more than 18,000 locations in 100 countries, the companies said.
"We are excited to build on this progress as we continue to expand Burger King around the world and look forward to working with and learning from Tim Hortons as we together create the world's leading global restaurant business," Burger King CEO Daniel Schwartz said in awritten statement
The merger reflects thedesire by both companies to expand internationally
and could help pose a greater threat to market leaders McDonald's and Starbucks.
Burger King said it would pay the entire amount in cash and stock for the Canadian coffee and doughnut chain. Warren Buffett's Berkshire Hathaway was also helping finance the deal with $3 billion of preferred equity financing, but would not have any role in the new company's managing operations, the companies said.
The equity firm 3G Capital, Burger King's majority owner, will have a 51 percent stake in the joint company.
The two companies' current combined market value is about $18 billion.
el/hg (AP, AFP, dpa, Reuters)