Miami -- Burger King Worldwide agreed to buy Canadian quick-serve chain Tim Hortons for approximately $11.4 billion, creating the world’s third largest quick-serve restaurant company. Under a tax inversion deal, the corporate headquarters of the new company will be in Canada, where the combined company’s biggest market will be.
The two chains will continue to be run independently. Burger King will still operate out of Miami, and Tim Hortons will remain based in Oakville, Ontario. The combined company will have 18,000 restaurants in 100 countries, and $23 billion in annual revenue.
The location of the corporate base outside the United States is sure to ignite controversy as it comes at a time when such moves are coming under heavy criticism from Washington. According to the New York Times however, the decision to locate the headquarters in Canada is primarily aimed at appeasing Canadian regulators wary of a company outside its borders buying such a beloved national icon as Tim Hortons, Burger King is expected to save only a little on taxes through the move, the report said.
Under the terms of the deal, Burger King will pay 65.50 Canadian dollars in cash and 0.8025 of one of its shares for each Tim Hortons share. That amounts to about 94.05 dollars a share, or $85.78 a share, based on Burger King’s closing price on Monday.
3G Capital, the Brazil-based private equity firm that controls Burger King, will retain majority control of the combined company, with a 51% stake. Alex Behring, 3G managing partner Alex Behring will be executive chairman of the merged company.
“Our combined size, international footprint and industry-leading growth trajectory will deliver superb value and opportunity for both Burger King and Tim Hortons shareholders, our dedicated employees, strong franchisees, and partners,” Behring said in a statement. “We have great respect for the Tim Hortons team and look forward to working together to realize the full potential of these two extraordinary businesses.”