Burger King Buys Canadian Doughnut Chain for $11 Billion

By Katie Lyons

Tue Aug 26th, 2014 11:08am America/Los_Angeles

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MIAMI (AP) – Burger King says it’s struck a deal to buy Tim Hortons Inc. for about $11 billion. The move creates the world’s third-largest fast-food company and could accelerate the international expansion of the Canadian coffee and doughnut chain.

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.

Some analysts have suggested that Canada’s lower tax rates stand to benefit Burger King over time. But Burger King says 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.

In recent years, more U.S. companies have acquired businesses in countries with lower tax rates, then moved their headquarters there. Such tax inversions have become the subject of criticism by President Barack Obama and Congress because they mean the loss of revenue for the U.S. government.

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