Home' Trinidad and Tobago Guardian : August 26th 2014 Contents A23
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MIAMI---Burger King is in talks to buy
doughnut chain Tim Hortons and create
a new holding company headquartered
in Canada, a move that could shave its
Such an overseas shift, called a tax inver-
sion, has become increasingly popular
among US companies and a hot political
issue. Burger King was founded in 1954
with a single restaurant in Miami, where
it is currently based.
Shares of Burger King and Tim Hortons
both jumped 17 per cent before the opening
bell, heading toward all-time highs.
In a tax inversion, a US company reor-
ganises in a country with a lower tax rate
by acquiring or merging with a company
there. Inversions also allow companies to
transfer money earned overseas to the par-
ent company without paying additional
US taxes. That money can be used to rein-
vest in the business or to fund dividends
and buybacks, among other things.
Companies like AbbVie, a pharmaceu-
tical with its headquarters just outside
Chicago, have tied up with companies
overseas to achieve that type of tax cut.
More recently, Walgreen backed away from
such a plan under intense pressure and
criticism at home.
Burger King and Tim Hortons cautioned
on Sunday that there was no guarantee a
deal would happen, and it s not clear exact-
ly how much a tie-up would reduce Burger
King s tax costs. But a recent report by
KPMG found that total tax costs in Canada
are 46.4 per cent lower than in the United
Burger King said its majority owner,
investment firm 3G Capital, would own
the majority of shares of the new company
if a deal were to happen.
3G Capital, which has offices in Brazil
and New York, is known for its aggressive
cost-cutting. The firm bought Burger King
in 2010 and went to work trimming over-
head costs and revamping operations before
taking the chain public again in 2012. Last
year, 3G also teamed with Berkshire Hath-
away Inc to take HJ Heinz Co private in
a US$23 billion deal, and has been cutting
costs there as well.
Tim Hortons, known for its doughnuts
and coffee, has been paired with US fast-
food chains in the past. It was purchased
by Wendy s International Inc in 1995. Then
in 2006 it completed an initial public offer-
ing and was spun off as a separate com-
Burger King and Tim Hortons say the
deal would also allow the doughnut chain
to accelerate its growth in international
markets. The company had 4,546 restau-
rants at the end of June, with 3,630 in
Canada, 866 in the US and 50 in the Per-
sian Gulf area.
The companies say Burger King World-
wide Inc and Tim Hortons Inc, based in
Ontario, would continue to operate as sep-
arate brands but would share corporate
services. The talks were first reported by
The Wall Street Journal.
The new company would have 18,000
restaurants in 100 countries with about
US$22 billion in sales, which the companies
say would make it the world s third-largest
fast-food restaurant company.
Burger King s stock surged US$4.29, to
US$31.40 before the market opened yes-
terday. Shares reached an all-time high of
US$68.95 on Friday.
Shares of Tim Hortons jumped
US$10.66 to US$73.50 before the opening
bell. Shares of the Canadian company also
hit an all-time high Friday at US$68.95.
Burger King looks to buy Tim Hortons
Burger King is in discussions to purchase Tim
Hortons. Here's a look at the two restaurants.
• Established: 1954
• Headquarters: Miami
• Market capitalization: US$11.03 billion,
according to FactSet.
• More than 13,000 restaurants in 98 countries
and territories globally.
• Sells burgers, fries, sandwiches, salads,
desserts and other goods. Beverages include
sodas, frozen drinks, milk, coffee and other
• Known as home of the Whopper. Nearly all of
its restaurants are owned and run by
• Established: 1964
• Headquarters: Canada
• Market capitalization: $10.96 billion, according
• More than 4,500 restaurants. This includes
3,630 in Canada, 866 in the US and 50 in the
Persian Gulf area.
• Known for its doughnuts and coffee,
restaurants also sells fruit smoothies,
sandwiches, soup, chili, paninis, wraps and
• The company's co-founder, Tim Horton, played
in the National Hockey League for almost a
quarter century, with stretches in Toronto,
New York, Pittsburgh, and Buffalo.
• Purchased by Wendy's International Inc. in
1995. Completed initial public offering and was
spun off as a separate public company in
A Burger King sign and a Tim Hortons sign are displayed in Lower Sackville, Nova Scotia, yesterday. Burger King is in talks to buy Tim Hortons in
hopes of creating a new, publicly traded company with its headquarters in Canada. AP PHOTO
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