Burger King will purchase Canadian coffee and doughnut chain Tim Hortons for $11 billion, the company has confirmed. But the company won't just stake a northern claim, but will relocate its headquarters to Canada, thereby legally avoiding its tax bill, though the company insists it's not about the taxes.
The corporate headquarters of the new company will be in Canada. The two brands will continue to be run as stand-alone chains, with Burger King still operating out of Miami.While the new corporation will be headquartered in Canada, Behring says Burger King and Tim Hortons will stay distinct operations and BK will continue to be operated out of its current Miama, Florida base.
Some analysts have suggested that Canada's lower tax rates stand to benefit Burger King over time. But Burger King said that's the not main motivation for the deal.
During a conference call with analysts and investors, Burger King Executive Chairman Alex Behring stressed that international growth possibilities are driving the deal. He noted that 3G Capital, the investment firm that owns a majority stake in Burger King, has turned the hamburger company into one of the fastest-growing chains since buying it in 2010. He said that experience will be applied to Tim Hortons.
"It's not being driven by tax rates," Behring said.
Those assurances might fall on deaf ears with BK's customers, who are ripping the corporation on its Facebook page, vowing boycotts and calling the company a "traitor," "tax cheat" and "un-American." It might be a good deal for the company on taxes, but the backlash at home—the same backlash that was a factor in Walgreens deciding against inversion—will have to be overcome.