Tim Hortons Inc. has agreed to be purchased by Burger King
Worldwide, Inc., which would create the third-largest fast food
company in the world with estimated combined sales around $23
billion USD and restaurants in 100 countries (reported here). The merger would provide Tim Hortons
with expansion opportunities into new markets.
As part of the proposed transaction, the combined headquarters
would be located in Canada, where the company would benefit from a
lower corporate tax rate, and the company would be listed on the
TSX. The proposed merger is expected to help accelerate the
expansion of Tim Hortons.
The merger was subject to a formal review by the Competition
Bureau of Canada. Parties must generally notify the Bureau of a
proposed transaction when the assets in Canada or revenues of the
target firm generated in or from Canada exceed $82 million CAD
(this threshold increases annually), and when the combined Canadian
assets or revenues of the parties and their respective affiliates
in, from, or into Canada exceed $400 million CAD.
The Bureau concluded on October 28, 2014 that the proposed
merger would not lead to a substantial lessening or prevention of
competition. The primary reason for this decision is that there are
a large number of competitors in the fast food industry, as well as
the low barriers to entry into the market. The proposed transaction
received clearance from United States anti-trust regulators in
The merger was also subject to a review under the Investment
Canada Act. Non-Canadian WTO member investors must generally notify
Investment Canada of a proposed transaction to acquire control of a
Canadian business when the assets of the Canadian business exceed
$354 million CAD (this threshold increases annually).
On December 4, 2014, the proposed transaction was approved by
Industry Canada. As part of the approval, the companies agreed not
to combine their brands in Canada or the United States, so that Tim
Hortons will continue to be managed as a "distinct
brand." Other conditions include continuing current employment
levels, and that Canadians must be at least 50% of Tim Hortons'
board of directors.
If the proposed transaction proceeds, the brands will be managed
independently but will be able to rely on combined resources and
expertise to expand their markets.
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