The Wall Street Journal's Liz Hoffman and Dana Mattioli report Burger King is in talks to buy Canadian donut giant Tim Horton's to pull off a "tax inversion" that would see the home of the Whopper move to Canada to avoid corporate levies in the U.S.
The report was confirmed by the Toronto Globe and Mail's Paul Waldie.
"One of the people said a deal between the two companies could be struck soon, though additional details on timing couldn't be learned," Hoffman and Mattioli say. "Together the restaurant companies have a market value of about $18 billion."
We've written a lot about how tax inversions have recently surged in the U.S. as cash-flush companies, looking to make deals, prioritize those with low exposure to what some see as overly burdensome corporate taxes. Here's the chart from Goldman showing the spike:
The issue has the full attention of President Barack Obama, who told CNBC's Steve Liesman in July that inversions "[undermine] people's confidence in how companies are thinking about their responsibilities to the country as a whole."In a recent Washington Post op-ed, Treasury Secretary Jack Lew urged Congress to pass legislation the administration has been proposing that would overhaul the corporate tax code to make inversions less appealing.
The deal would create the world's third-largest fast food enterprise — the firms' current market caps total approximately $18 billion. Burger King went public for the third time in 2012. Bill Ackman's Pershing Square is a minority stakeholder.
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