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Burger King and Tim Hortons agree merger details | Burger King and Tim Hortons agree merger details |
(about 11 hours later) | |
Burger King has confirmed that it plans to buy Tim Hortons, the Canadian coffee and doughnut chain, for about $11bn (£6.6bn; 8.3bn euros). | Burger King has confirmed that it plans to buy Tim Hortons, the Canadian coffee and doughnut chain, for about $11bn (£6.6bn; 8.3bn euros). |
The deal would create the world's third-largest fast-food chain, with 18,000 restaurants in 100 countries. | The deal would create the world's third-largest fast-food chain, with 18,000 restaurants in 100 countries. |
The new group would have a market capitalisation of about $18bn and annual sales in the region of $23bn. | The new group would have a market capitalisation of about $18bn and annual sales in the region of $23bn. |
Burger King's majority shareholder, 3G Capital, will own about 51% of the merged company. | Burger King's majority shareholder, 3G Capital, will own about 51% of the merged company. |
Under the terms of the deal, which has been unanimously approved by both companies' boards of directors, Tim Hortons shareholders will receive 65.50 Canadian dollars ($59.74; £36.10) in cash and 0.8025 shares of the new company for every share they own, the companies said in a joint statement. | Under the terms of the deal, which has been unanimously approved by both companies' boards of directors, Tim Hortons shareholders will receive 65.50 Canadian dollars ($59.74; £36.10) in cash and 0.8025 shares of the new company for every share they own, the companies said in a joint statement. |
Warren Buffett's investment firm Berkshire Hathaway will contribute $3bn "in preferred equity financing" to the deal, the companies said, but would not have any managerial control over the business. | |
Although Burger King's shares closed up 19.5% on Monday after it was revealed the two companies were in talks, shares closed down 4.32% on Tuesday when the terms were finalised. | Although Burger King's shares closed up 19.5% on Monday after it was revealed the two companies were in talks, shares closed down 4.32% on Tuesday when the terms were finalised. |
However, investors were cheered by the prospect for Tim Hortons: shares in the firm ended up 8.47% on Tuesday, followed by a 19% rise in the share price on Monday. | However, investors were cheered by the prospect for Tim Hortons: shares in the firm ended up 8.47% on Tuesday, followed by a 19% rise in the share price on Monday. |
Tax avoidance | Tax avoidance |
The firms have said that any new group would have its headquarters in Canada, where corporate taxes are lower. | The firms have said that any new group would have its headquarters in Canada, where corporate taxes are lower. |
These so-called "tax inversion" deals are attracting increasing criticism in the US, where President Barack Obama is understood to be looking at how they can be prevented in future. | These so-called "tax inversion" deals are attracting increasing criticism in the US, where President Barack Obama is understood to be looking at how they can be prevented in future. |
The US corporate tax rate is 35%, but 26.5% in Ontario, Canada, where Tim Hortons is based. | The US corporate tax rate is 35%, but 26.5% in Ontario, Canada, where Tim Hortons is based. |
3G Capital, a New York and Rio de Janeiro-based investment company, bought Burger King in 2010 for about $3.3bn and floated the company in 2012, holding on to nearly 70% of the shares. | 3G Capital, a New York and Rio de Janeiro-based investment company, bought Burger King in 2010 for about $3.3bn and floated the company in 2012, holding on to nearly 70% of the shares. |
The companies will retain their separate brand identities, but save costs by sharing corporate services. | The companies will retain their separate brand identities, but save costs by sharing corporate services. |
Tim Hortons used to be owned by US fast-food chain Wendy's, before being spun off as a separate company in 2006. | Tim Hortons used to be owned by US fast-food chain Wendy's, before being spun off as a separate company in 2006. |