Tag: tim hortons
Burger King To Buy Tim Hortons; New Firm To Be Based In Canada

Burger King To Buy Tim Hortons; New Firm To Be Based In Canada

By Jim Puzzanghera, Los Angeles Times

Burger King Worldwide Inc. said Tuesday it would buy the Tim Hortons coffee-and-doughnut chain for about $11.4 billion and shift the new firm’s headquarters to Canada, where the corporate tax rate is lower than in the United States.

The cash-and-stock deal creates the world’s third-largest fast-food chain, with more than 18,000 restaurants in 100 countries and about $23 billion in annual sales. Burger King is looking to Canada’s Tim Hortons to boost its standing in the booming breakfast market.

Warren Buffett’s Berkshire Hathaway will help finance the deal with $3 billion, receiving preferred shares but having no role in management and operation of the new company, Burger King and Tim Hortons said.

Burger King and Tim Hortons are well-known names in their home countries and will continue to operate as stand-alone, independent brands in the so-called quick-service restaurant industry.

“By bringing together our two iconic companies under common ownership, we are creating a global QSR powerhouse,” said Alex Behring, Burger King’s executive chairman.

Behring is managing partner of 3G Capital, a Brazilian investment firm that controls Burger King. He will become executive chairman of the combined company and 3G Capital will own about 51 percent of the new firm, the companies said.

Tim Hortons Chief Executive Marc Caira will be vice chairman of the new company.

Burger King’s headquarters will remain in Miami, and Tim Hortons will stay in Oakville, Ontario. The headquarters for the combined firm will be in Canada, which will be its largest market.

Canada also has a lower tax rate, allowing Burger King to reduce its tax bill.

The combined federal, state, and local corporate tax rate in Canada is 26.3 percent, according to the Organisation for Economic Cooperation and Development. The combined U.S. corporate rate is 39.1 percent.

Burger King’s overall effective tax rate in 2013 was 27.5 percent, according to its annual report. Tim Hortons effective tax rate for the same year was 26.8 percent.

Buying a foreign competitor in a lower-tax location and shifting headquarters to that company’s home country is known as a tax inversion. The maneuver has come under fire in Washington as more U.S. companies are using it to lower their tax bills.

Analysts said there are strong strategic reasons for Burger King to purchase Tim Hortons beyond the tax benefit, which is not as large as some recent inversion deals in the pharmaceutical industry.

Still, Burger King is a popular U.S. brand and its decision to move its corporate headquarters to Canada could fuel efforts in Congress to place new restrictions on inversions.

Sen. Sherrod Brown (D-OH), urged Congress to act quickly to stop offshore tax shifting and called for a boycott of Burger King.

“Burger King’s decision to abandon the United States means consumers should turn to Wendy’s Old Fashioned Hamburgers or White Castle sliders,” Brown said Monday after news of the potential deal surfaced.

“Burger King has always said ‘Have it Your Way,'” he said. “Well, my way is to support two Ohio companies that haven’t abandoned their country or customers.”

AFP Photo/Robyn Beck

Interested in national news? Sign up for our daily email newsletter!

S&P 500 Tops 2,000 Mark For First Time

S&P 500 Tops 2,000 Mark For First Time

New York (AFP) — The S&P 500 topped the 2,000 mark for the first time Monday helped by more promises of economic support from the United States and European central banks.

A fresh burst of merger activity also sparked buyers, with Switzerland’s Roche paying $8.3 billion for smaller pharmaceutical company InterMune, and fast-food chains Burger King and Tim Hortons discussing a tie-up.

An hour into trade, the Dow Jones Industrial Average was up 91.32 points (0.54 percent) to 17,092.54.

The S&P 500 added 10.49 (0.53 percent) at 1,998.89, after earlier having just barely topped the 2,000 mark for the first time ever.

The broad-based index was up more than eight percent for the year.

The tech-rich Nasdaq Composite Index meanwhile gained 27.53 (0.61 percent) to 4,5666.08, its highest level since the dot-come crash 14 years ago.

Patrick O’Hare of Briefing.com said markets were helped by “signs of relief that central bankers are still pushing policy accommodation; signs of relief that Russia didn’t attack Ukraine; signs that M&A activity is picking up; and signs that market rates continue to be repressed.”

Speaking at the Federal Reserve’s central banking symposium in Jackson Hole, Wyoming, on Friday, both Fed Chair Janet Yellen and European Central Bank chief Mario Draghi assured that they would keep easy-money policies in place — and, for the ECB, add to them — as long as necessary to boost employment.

Roche’s $74 a share offer for InterMune, which developed a treatment for the deadly lung affliction pulmonary fibrosis, sent InterMune’s shares up 35.6 percent to $72.96.

Burger King said it was in talks to buy Canada’s coffee and donut chain Tim Hortons with the aim of moving Burger King’s headquarters from the United States to Canada to take advantage of lower corporate tax rates.

Burger King shares gained 14.9 percent while Tim Hortons, traded on the Toronto exchange, added 20.23 percent.

Goldman Sachs rose 1.7 percent after last Friday’s late announcement of a deal with the Federal Housing Finance Agency to settle allegations it sold misrepresented mortgage bonds to Fannie Mae and Freddie Mac ahead of the financial crisis.

Goldman is buying back $3.15 billion of the bonds, with the penalty accruing to it estimated only at $1.2 billion, the difference between the market value of the bonds and what it is paying the FHFA.

Bond prices were little-changed. The yield on the 10-year U.S. Treasury held steady at 2.40 percent from Friday, while the 30-year dropped to 3.15 percent from 3.16 percent. Bond prices and yields move inversely.

AFP Photo/Spencer Platt

Interested in economic news? Sign up for our daily email newsletter!