Shares in fast-food behemoth Burger King and Canadian coffee and doughnut chain Tim Hortons rose yesterday after news that they are in merger talks.
The companies, which are similar in market size, confirmed they were discussing a takeover of Tim Hortons by Burger King. The new entity would be based in Canada, which has a lower corporate tax rate than the US.
Miller Tabak analyst Stephen Anderson said he did not expect any competition hurdles as the firms serve different rapid-service segments. However, he warned that the proposed deal could face a backlash on both sides of the border.
In Canada, critics are likely to be unhappy that the well-known Tim Hortons brand would once again fall into foreign hands, while US-based opponents are likely to attack Burger King’s plan to domicile in Canada to cut its tax burden.
A tie-up would give the burger giant access to popular coffee products that it could add to its 7,400-plus restaurants across North America, along with a doughnut and coffee chain brand that is growing in the US.