Burger King in talks to buy Tim Hortons for tax inversion

Burger King (NYSE:BKW) could be the latest company trying its hand at tax inversion as it enters into talks to buy Canadian chain Tim Hortons. If purchased, the U.S. fast food chain may move its headquarters to Canada, gaining the benefits of a lower-tax country.

By merging with the Canadian coffee and doughnut shop, Burger King would create the world's third-largest fast-food chain, reported Bloomberg. Canada's corporate tax rate is 26.5 percent, compared with 40 percent in the U.S.

This news comes only weeks after Walgreens purchased the remaining shares of European brand Alliance Boots and seemed ready to move the drugstore's headquarters to Switzerland. Although Walgreens ultimately decided to keep its home base on U.S. soil, other companies are exploring the financial prospects of a tax move. Tax inversion allows companies to curtail the expenses of higher U.S. taxes and save money on foreign earnings held outside the United States by relocating the official headquarters to another country that would tax less.

3G Capital, which has a 70 percent stake in Burger King, would own a majority share of the new company, reported Reuters. The two companies would continue to operate as stand-alone brands.

Combined, the businesses with more than 18,000 restaurants and a presence in 100 countries would yield about $22 billion in sales.

Burger King reported a revenue drop of 6.1 percent to $261.2 million in the second quarter. The company has been trying to introduce fewer items to streamline its kitchens.

In other strategic moves, the fast-food chain recently launched a mobile payment app that allows customers to pay with their smartphones.

For more:
-See this Bloomberg article
-See this Reuters article

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