OAKVILLE, Ont. _ Miami-based Burger King is buying Canada's iconic coffee chain Tim Hortons for about US$11-billion in a deal that will allow the two fast food companies to operate as independent brands.
The companies say the transaction will create a new company that will form the world's third-largest quick service restaurant company.
The new global company will have about $23 billion in sales and more than 18,000 restaurants in 100 countries, allowing both chains to expand globally.
The corporate headquarters will be based in Canada, the largest market of the combined company, and could help Burger King lower its U.S. tax bill.
Oakville, Ont., will remain the global home of Tim Hortons (TSX:THI) and Miami will remain global home of Burger King.
Private equity firm 3G Capital will own about 51 per cent of the new company.
Under the terms of the transaction, Burger King will pay C$65.50 in cash and 0.8025 common shares of the new company for each Tim Hortons share. This represents total value per Tim Hortons share of C$94.05 Canadian, based on Burger King's closing stock price on Monday. Tim Hortons shareholders can choose either all-cash or all stock in the new company.
Alex Behring, executive chairman of Burger King and managing partner at 3G Capital, will lead the new global company as executive chairman and director.
Tim Hortons president and CEO Marc Caira will be appointed vice-chairman and a director, focused on strategy and global business development.
As part of the new company's commitment to Canada, there are no plans to change the way Tim Hortons works with its franchisees, or its business model and there are no plans to cut staff working at the restaurant level.
``As an independent brand within the new company, this transaction will enable us to move more quickly and efficiently to bring Tim Hortons iconic Canadian brand to a new global customer base,'' Caira said in a statement on Tuesday.
``At the same time, our customers, employees, franchisees and fellow Canadians can all rest assured that Tim Hortons will still be Tim Hortons following this transaction, including our core values, employee and franchisee relationships, community support and fresh coffee.''
Tim Hortons shares were up 8.9 per cent to US$82.10 in pre-market trading in New York, while Burger King (NYSE:BKW) ticked 0.5 per cent higher to US$32.60. Both shares surged almost 20 per cent on Monday when reports of the deal first surfaced.