Laura Rosenfeld, Tech Times

If you've ever wished you could have a Whopper with a doughnut on the side, your dream may soon become a reality.

Burger King announced that it will buy the Canadian coffee chain Tim Hortons for about $11 billion. The merger will create the third largest fast food company in the world, behind McDonald's and Yum Brands, which owns Taco Bell, KFC and Pizza Hut.

So what does this deal mean for the millions of people hoping to grab a cup of coffee on the way to work or enjoy some Chicken Fries at 3 a.m.? Will Burger King start serving everything with a side of maple syrup and will Tim Hortons start frying everything in sight? Here's all the answers to your burning questions about this deal.

What is Tim Hortons?

Tim Hortons is basically Canada's version of Dunkin' Donuts. You can get your coffee, tea, breakfast and baked goods there and go. Tim Hortons made its way to the States when it merged with Wendy's International, Inc. in 1995, although it was spun off as a separate company in 2006. Today, there are 3,000 restaurants in Canada and 600 in the U.S. mostly along the eastern seaboard in states such as New York, Massachusetts and Connecticut.

What does the deal entail?

The headquarters of this company will be with our neighbors to the north, although Burger King will stay at its offices in Miami. The shares of the new parent company will likely be listed on the New York Stock Exchange and the Toronto Stock Exchange. Each restaurant chain will be managed independently, but the Board of Directors of each brand will combine to create one board of the parent company.

What do taxes have to do with it?

The merger might enable Burger King to decrease its U.S. tax bill, which was most likely a major reason that the company pursued the deal. As USA Today points out, a recent report by KPMG found that total tax costs in Canada are approximately 46 percent lower than in the U.S. The move raises questions about tax inversions, when a U.S. company merges with a smaller firm outside of the country but largely operates within the U.S. This has put pressure on lawmakers to take action to prevent more companies from pursuing tax inversions.

How does this help the companies?

Aside from lowering its tax rates, Burger King has much to gain from this merger. The move may help Burger King earn a greater share of the growing fast food breakfast market, according to The Washington Post. Tim Hortons may also want to expand its influence into international markets with Burger King's help, according to a statement from the companies.

What does Warren Buffett have to do with this deal?

Berkshire Hathaway, Warren Buffett's investment firm, has backed the deal with $3 billion of equity financing. However, the firm will not be involved in management or operation of the new parent company and its businesses.

What do people think about this?

Supporters and critics alike took to Twitter to voice their opinions on the Burger King-Tim Hortons merger. It looks like citizens of both the U.S. and Canada are not happy with the partnership.

Some think Burger King's tax inversion will hurt the country.

Some Canadians are not happy their beloved coffee chain will have even more influence from corporate America.

And many Americans are hoping that the deal means a Tim Hortons will pop up near them.

ⓒ 2024 TECHTIMES.com All rights reserved. Do not reproduce without permission.
Tags: Tim Hortons Burger King fast food
Join the Discussion

Related Article