Aug 262014
 

Looks like a merger is on the menu for Burger King ­čÖé It’s currently in talks to merge with┬áCanadian company Tim Hortons and move its headquarters up here to Canada ­čśÇ Tim Hortons is a quick service coffee chain that has a strong Canadian identity. Here’s a┬ádrive thru window at a typical Tim Hortons.

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Last year I blogged about buying some Tim Hortons shares and how investing in the coffee industry is the best idea ever! Thankfully my investment paid┬áoff because each share today is worth about 62% more┬áthan when I purchased them. Tim Hortons’ performance has beaten the overall stock market index in both Canada and the U.S. ­čÖé

If the acquisition is successful Burger King and Tim Hortons would continue to operate as individual franchises. You won’t find┬áTimbits in your Whopper, and you won’t be offered fries with your coffee, haha ­čść

The merger would benefit both companies. Right now Tim Hortons sells most of its coffee in Canada because it faces tough competition in the U.S. from Starbucks and Dunkin’ Donuts. But Burger King is already established in the U.S. and also has locations in Latin America and Europe, so Tim Hortons can use those┬ávaluable business channels┬áto expand its brand awareness, and gain better access to global markets. Meanwhile Burger King would benefit from the high margin coffee business and also save money via tax inversion.

Tax inversion is when a U.S. company that has large overseas markets moves its main corporate office into a lower tax┬ácountry. This allows the company to reposition itself as a foreign corporation so it can┬áreturn foreign profits┬áto stockholders without double taxation. This means if the merger is successful Burger King will get to pay a lower income tax, which will leave┬ámore after tax profits┬áfor its shareholders ­čśÇ

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