Tim Hortons is in talks with Burger King about a merger that would create one of the world’s largest fast-food chains with 18,000 restaurants worldwide and $22-billion (U.S.) in sales.
Both companies announced late Sunday that they are in discussions to create a new holding company based in Canada, adding that the move would create the third-largest quick-service restaurant provider in the world. The companies said both brands would operate as standalone brands.
“A key driver of these discussions is the potential to leverage Burger King’s worldwide footprint and experience in global development to accelerate Tim Hortons growth in international markets,” Tim Hortons said in a statement.In early trading Monday, Tim Hortons stock soared more than 18 per cent in Toronto. Shares of Burger King rose climbed close to 15 per cent in early trade in New York.
“3G Capital, the majority owner of Burger King, will 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 deal would be structured as a so-called tax inversion, the Wall Street Journal reported Sunday, citing people familiar with the matter.
The sale of Tim Hortons, a popular and ubiquitous Canadian corporate status symbol, would cross business, political and cultural lines, with potentially huge ramifications. The franchise opened its first restaurant in Hamilton in 1964.
Tim Hortons CEO Marc Caira set out his five-year strategic plan for the chain in February, aiming to expand its restaurant base and spur customers to spend more during each visit to narrow the gap between what customers spend compared with McDonald’s and Starbucks.
Based in Oakville, Ont., the company is well-known for its coffee, a high-margin area where U.S. fast food giants have raced to grab market share.
A deal between the two companies could be struck soon, although details on timing remain unknown, one of the Journal’s sources told the paper.
Tim Hortons’ second-quarter results beat analysts’ estimates: The company’s profit was flat at $123.8-million, although its share profit rose to 92 cents from 81 cents. Revenue rose 9.3 per cent to $874.3-million and the company’s same-store sales – a key measure of retail health – were its strongest since 2012.
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