Tim Hortons, Burger King Confirm Talks Over Strategic Transaction

By Dow Jones Business News, 

Burger King Worldwide Inc. ( BKW ) confirmed late Sunday it is in talks with Canadian coffee-and-doughnut chain Tim Hortons Inc. ( THI ) to form the world's third-largest fast-food company.

It confirmed an earlier report in The Wall Street Journal that the two companies were discussing a deal.

The deal will create a new quick-service restaurant business publicly listed and headquartered in Canada, the two companies said in a statement.

Burger King's majority shareholder 3G Capital will continue to own most of the shares of the new company with the remainder held by existing shareholders of Tim Hortons and Burger King, the statement said.

Tim Hortons and Burger King will operate as stand-alone brands, the statement said.

"The new company will be the world's third-largest quick-service restaurant company with approximately $22 billion in system sales and over 18,000 restaurants in 100 countries world-wide.

"The transaction remains subject to negotiation of definitive agreements. There can be no assurance that any agreement will be reached or that a transaction will be consummated," the statement said.

There will be no further comment from either company until a transaction is agreed or discussions are discontinued, the companies said.

The Wall Street Journal report citing people with knowledge of the matter said the deal will be structured as a "tax inversion" and move Burger King's domicile abroad.

One of the people said a deal may be struck soon though additional details on timing couldn't be learned. Together the restaurant companies have a market value of about $18 billion.

By moving to a lower-tax jurisdiction, inversion deals enable companies to save money on foreign earnings and cash held abroad and, in some cases, lower their overall corporate rate, too.

Write to realtimedesksingapore@dowjones.com

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This article appears in: Commodities

Referenced Stocks: BKW , THI

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