Burger King-Tim Hortons Merger Gets Shareholders' Nod - Analyst Blog

Burger King Worldwide, Inc. (BKW) and Tim Hortons Inc. (THI) have crossed the biggest hurdle before their merger. Shareholders of Tim Hortons have approved the long-awaited $11.0 billion transaction. The merged corporate entity will be named Restaurant Brands International and trade on the Toronto Stock Exchange (TSX) and New York Stock Exchange (NYSE) under the symbol QSR.

Burger King is the second largest fast food hamburger chain in the world, while Tim Hortons is the largest coffee and doughnuts seller in Canada. Both will operate as standalone brands.

Burger King's shareholders are not required to vote on the merger since 3G Capital that owns approximately 70% of the company has already approved the transaction. The deal that is partly financed by billionaire investor, Warren Buffett is subject to customary closing conditions and issuance of final order of the Ontario Superior Court of Justice that is expected to take place on Dec 11 with completion of the other related transactions on or around Dec 12, 2014.

Restaurant Brands International would be the world's third-largest fast food company with a market value of roughly $18 billion. The combined business is expected to generate about $22 billion in sales and constitute more than 18,000 restaurants in 100 countries.

However, it has not been easy for the two companies so far. After announcing the merger in August this year, the merger received approval from the Canadian government only last week after Burger King agreed to comply to certain conditions. (Read: Burger King-Tim Hortons Merger Gets Canadian Approval)).

Moreover, the deal has been the talk of the town for a while now owing to the tax issue. The location of the headquarters of the new company has been a bone of contention ever since the deal was announced. Burger King was criticized as some thought that the deal was intended to derive benefits from tax inversion by shifting the headquarters of the new company to Canada. The deal did not find favor with the White House either. Also, a number of people expressed their disappointment on social media websites like Facebook, Inc. (FB) and Twitter, Inc. (TWTR).

Also, rumors that the deal would result in extensive layoffs at Tim Hortons further attracted criticism. Currently, Burger King and Tim Hortons both carry a Zacks Rank #3 (Hold).

 

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