August 25th, 2014, AnnouncemenT On a fine Monday morning, New York Stock Exchange (NYSE) starts its regular trading with a slow picks of shares in primary stocks. At 09.35, investors start buying Burger King and Tim Hortons stocks, surges to its best high price of $32.40(19.5% ) and $74.72 (18.9% ) per share. Behind this high drama in floor of NYSE, there was a one of the key announcement rocked. Burger King Worldwide Inc., an American based fast food chain and Tim Hortons Inc., Canadian based coffee and doughnut chain combined announced news of potential merger seeing both on the grounds of market strategic and largest food chain in global market. With approximately $23 billion in system sales, over 18,000 restaurants in 100 countries and two strong, thriving, independent brands, the new company will have an extensive international footprint and significant growth potential. The new global company will be based in Canada, the largest market of the combined company. Tim Hortons and Burger King each have strong franchisee networks and iconic brands that are loved by their guests. Following the closing of the transaction, each brand will be managed independently, while benefitting from global scale and reach and sharing of best practices that will come with common ownership by the new company. “By bringing together our two iconic companies under common ownership, we are creating a global QSR powerhouse. Our combined size, international footprint and industry-leading growth trajectory will deliver superb value and opportunity for both Burger King and Tim Hortons shareholders, our dedicated employees, strong franchisees, and partners. We have great respect for the Tim Hortons team and look forward to working together to realize the full potential of these two extraordinary businesses." - Alex Behring, Executive Chairman of Burger King and Managing Partner of 3G Capital “We are very proud of the great history of our organization and the progresswe have achieved in creating value and delivering the ultimate experience for our guests. 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. 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." - Marc Caira, President and CEO of Tim Hortons Burger king – KING OF HAMBURGERS
Burger King, often abbreviated as BK, is a global chain of hamburger fast food restaurants headquartered in unincorporated Miami-Dade County, Florida, United States. The company began in 1953 as Insta-Burger King, a Jacksonville, Florida-based restaurant chain. After Insta-Burger King ran into financial difficulties in 1954, its two Miami-based franchisees, David Edgerton and James McLamore, purchased the company and renamed it Burger King. Over the next half century, the company would change hands four times, with its third set of owners, a partnership of TPG Capital, Bain Capital, and Goldman Sachs Capital Partners, taking it public in 2002. In late 2010, 3G Capital of Brazil acquired a majority stake in BK in a deal valued at US$3.26 billion. The new owners promptly initiated a restructuring of the company to reverse its fortunes. 3G, along with partner Berkshire Hathaway. At the end of fiscal year 2013, Burger King reported it had over 13,000 outlets in 79 countries; of these, 66 percent are in the United States and 99 percent are privately owned and operated with its new owners moving to an entirely franchised model in 2013. BK has historically used several variations of franchising to expand its operations. The manner in which the company licenses its franchisees varies depending on the region, with some regional franchises, known as master franchises, responsible for selling franchise sub-licenses on the company's behalf. Burger King's relationship with its franchises has not always been harmonious. Occasional spats between the two have caused numerous issues, and in several instances the company's and its licensees' relations have degenerated into precedent-setting court cases.
The Burger King menu has expanded from a basic offering of burgers, French fries, sodas, and milkshakes in 1954, to a larger, more diverse set of product offerings. In 1957, the Whopper was the first major addition to the menu; it has since become Burger King's signature product

Burger king – BUSINESS STRATEGY
Burger King believe there are significant opportunities for our Company and the entire Burger King system by:
Driving sales and traffic in the U.S. and Canada: We have identified the following four pillars that we believe will enable us to drive future sales and traffic in the U.S. and Canada:
Menu:
The strength of our menu has been built upon our signature flame-grilled cooking process, which we believe results in better tasting burgers. Our menu strategy seeks to optimize our menu by focusing on our core products, such as our flagship Whopper® sandwich, while enhancing our menu to broaden our appeal to women, parties with kids and seniors. Our recently launched initiative to focus on our food expanded our product platforms and introduced 21 new or improved menu items in 2012. We believe that our renewed focus on our food will provide us the opportunity to meaningfully increase same store sales and margins.
Marketing & Communications: We have established a data driven marketing process which is focused on driving restaurant sales and traffic, while targeting a broader consumer base with more inclusive messaging. Through our food-centric marketing communication strategy, we believe we can refocus our consumers on our food, which is a core asset and competitive differentiator.
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We believe that our contemporary "20/20 design," which draws inspiration from our signature flame-grilled cooking process, will drive same store sales, higher profits and strong return on invested capital. To encourage franchisees to commit to these remodeling efforts, we developed a lower cost remodeling alternative and provided our U.S. franchisees with access to a third-party financing program. As of December 31, 2013, ~30% of the North America system was in the "20/20 design", and our goal is to have 40% reimaged by 2015.

Operations:
We have restructured our field teams through our "field optimization project," to significantly increase our field presence and restaurant visits by reducing the span of control of our field teams. We believe that this reduction in the number of restaurants for which a field employee is responsible will improve all aspects of restaurant operations, including food quality, guest service, speed of service and restaurant cleanliness. We also redefined the role of a field employee to be that of a "business coach" who is responsible for closely working with the restaurant teams and franchisees to achieve their sales, profit, and operational goals. The field employees ‘variable compensation is linked to the performance of those franchise restaurants. We believe that this "business coach" approach will ensure accountability and alignment with our franchisees. We have also launched standardized operational metrics to evaluate restaurants that focus on those core competencies that we believe will maximize the guest experience. We believe that enhancing our guests ‘experience increases traffic to restaurants and provides us and our franchisees the opportunity to improve sales and margins.
Accelerating international development:
The expansion of our international restaurant network is an integral part of our global portfolio realignment project. As part of this project we expect to accelerate our international development with strategic partners and joint ventures. Generally, these strategic arrangements grant one or more franchisees the exclusive right to develop and manage Burger King Restaurants in a specific country or region in exchange for commitments for substantial new restaurant development and a minority equity interest in the joint venture. We expect to focus our international expansion plans predominantly in high-growth emerging markets where we believe our current penetration is low relative to our potential. During 2011-12 we entered into joint venture and master franchise agreements in Brazil, Russia, and China. In 2013, we entered into joint venture and master franchise agreements in South Africa, India, and France. We expect to introduce the Burger King brand in additional new markets during 2014 and beyond.

Aggressively pursuing refranchising opportunities: We are aggressively pursuing opportunities to refranchise our domestic and international Company restaurants to new and existing franchisees, with the goal of approaching a 100% franchised system. We believe that a highly franchised business model will make our business less capital intensive and enhance our profits and margins.
Maintaining strong focus on corporate-level cost structure:
We are focused on identifying opportunities to continually drive corporate-level general and administrative ("G&A") efficiencies by (1) maintaining our "Zero Based Budgeting" program, which is a method of annual planning designed to build a strong ownership culture by requiring departmental budgets to estimate and justify costs and expenditures from a "zero base," rather than focusing on the prior year‘s base, and (2) tying a portion of management‘s incentive compensation specifically to our G&A budget.

Advanced Strategic: A Burger King strategy has focused the customer segment that spends the most money at its restaurants. These young men and women visit fast-food burger chains on average almost 10 times per month. The company has employed a combination of “loss leader” promotions” coupled with upsells of more expensive menu items, specifically higher-margin French fries and soft drinks. Recently Burger King has concentrated on adding restaurants and entering new strategic markets. They have added over 400 new restaurants in the last three years. The company seeks to further growth and popularity via its innovative marketing promotions such as the King television commercials.

Burger King has a strong international presence in 71 countries with local traditional business process/products which attracts more customers and high sustainability. Also the franchising model gives more feasibility in operation across the globe. Even though it’s very hard to maintain controllability more the quality and other processes on the franchise model, they have been substantially able be sustain its brand name and quality.

Financial Statistics:
Burger King have a large presence and its revenue, income, visitation combined their business very strongly against the market rivalry like McDonalds. Below are the few statistic which shows the over-all strength.

It’s been a remarkable business strategic for the strong hold on financial stand point of view. Since they faced a low revenue in terms of location in U.S and Canada on 2013, so they made a great deals to become a largest food chain in the world. On the bases of franchise revenues • Royalties: % of sales reported by franchised restaurant) : when collectability is assured • Initial franchise fee: when related restaurant begins operation • Renewal franchise fee: upon receipt of the non-refundable fee and execution of a new franchise agreement • Rental income on operating leases and direct financing lease: when collectability is assured The fast food hamburger restaurant industry is very competitive. McDonald is the leading company, followed by Burger King Worldwide and Wendy’s and many other local restaurants. • Burger King Worldwide plans to accelerate international development for principal drivers of long-term growth of the business and value of its shareholders • Burger King Worldwide plans to continue to implement refranchising initiative aiming or nearly 100 % franchised business.
This will enhance cash flow • Continue Re-imaging of franchises, strengthening, broadening the menu, • Food centric marketing “Taste is King” refocus consumers on food • Drive corporate-level G&A efficiencies at current levels through “Zero Based Budgeting” program to build strong ownership culture.

Burger king – LOCAL RIVARLY

Burger King Worldwide is a newly merged company. It is going through a major changes in its accounting, operating and financing strategies to stabilize and enhance the growth of the business. • It has been spending heavily on refranchising, changing images of the restaurants, expanding internationally, and advertisements. Due to its efficient operation strategies, in 2012 it refinanced huge some of debt. • It has been generating enough revenue to pay debts and dividends in 2012 and even in March 2013 to its shareholders and shareholder’s expectation of the company is high thus its stock price is expected to rise. • Burger King Worldwide is rapidly chasing after the McDonalds and making other fast food restaurants anxious through its new operation strategies and improved profitability and solvency yet it is not yet fully ready to catch up with the McDonalds and should be still be aware of Wendy’s and other
Companies because its company (after the merging) and the management team are relatively still new and in a process of adopting to the new environment.

TIM HORTONS – CANADIANS PRIDE
The chain's first store opened in 1964 in Hamilton, Ontario, under the name "Tim Horton Donuts"; the name was later abbreviated to "Tim Horton's" and then changed to "Tim Hortons" without the possessive apostrophe. The business was founded by Miles G. "Tim" Horton, who played in the National Hockey League from 1949 until his death in a car accident in 1974.Soon after Horton opened the store, he met Ron Joyce, a former Hamilton police constable. In 1965, Joyce took over the fledgling Tim Horton Donut Shop on Ottawa Street North in Hamilton. By 1967, after he had opened up two more stores, he and Tim Horton became full partners in the business. Upon Horton's death in 1974, Joyce bought out the Horton family's shares for $1 million and took over as sole owner of the existing chain of forty stores. Joyce expanded the chain quickly and aggressively in geography and in product selection. The 500th store opened in 1991.
Ron Joyce's aggressive expansion of the Tim Hortons business resulted in major changes to the Canadian coffee and doughnut restaurant market. Many independent doughnut shops and small chains were driven out of business, while Canada's per-capita ratio of doughnut shops surpassed those of all other countries. The company had originally been incorporated as Tim Donut Limited. By the 1990s, the company name had changed to The TDL Group Ltd. This was an effort by the company to diversify the business, removing the primary emphasis on doughnuts, and continuing the expansion of the menu options as consumer tastes broadened. Some older locations retain signage with the company's name including a possessive apostrophe, despite the fact that the official styling of the company's name has been Tim Hortons, without an apostrophe, for at least a decade. Tim Hortons became the Canadians most friendly and family brand status, as their culture and pride.

TIM HORTONS – 50 years young
For many Canadians, the day doesn’t start until they’ve had their first morning cup, with 78 per cent of Canadians enjoying a coffee at breakfast1. Serving nearly eight out of every ten coffees poured in Canada, Tim Hortons is proud that guests consistently choose its restaurants to ensure their day starts right. In appreciation of making us Canada’s favorite coffee, Tim Hortons is inviting Canadians to celebrate National Coffee Day with a $1 small Dark Roast offer from September 22 thru to 29.

“We’re honored to be the first morning stop for millions of Canadians, and we want to say thank you in time for National Coffee Day by offering our exciting new small Dark Roast coffee for only $1,” said Dave McKay, Vice President, Beverages, and Tim Hortons. “Last month we launched our Dark Roast blend, and it is quickly becoming another Canadian favorite as our guests tell us they love the full, robust flavor and enjoy having the option to choose between two great-tasting blends.”

Tim Hortons Dark Roast is a brand new premium blend made from 100 per cent Arabica beans, sourced from the world’s most renowned coffee regions. The new blend offers hints of citrus, cocoa and earthy tones with a rounded body. It is carefully roasted to bring out the full, rich flavor and aroma of a dark roast coffee, while ensuring a perfectly smooth finish.

“Whether it’s our iconic Original blend, Decaf, or our new Dark Roast coffee, the first priority for Tim Hortons is ensuring our guests have a superior tasting and perfectly brewed cup of coffee every time,” - Kevin West, Senior Coffee Master, Tim Hortons. “We do that by controlling every step of the coffee process, from selecting the beans, to roasting and blending the beans, to brewing in small batches. The entire Tim Hortons team works to ensure a best-in-class coffee for every guest, which is why it is the most beloved cup of coffee in Canada.”

TIM HORTONS – international business
Doing business around the globe, we operate in a variety of legal, ethical and
Cultural environments. The Company expects its employees to be aware of and comply with these Standards of Business Practices, as well as the legal and ethical requirements of each country in which the Company does business. At the same time, we must also be sensitive to different cultural practices in these locations. But while we may exercise some judgment, we still must maintain our ethical principles overseas. Thus, making corrupt payments in any form, violating a country’s laws, or engaging in unethical business conduct as a means of furthering the Company’s business, is prohibited. Further, it is inconsistent with these Standards to advise, approve or condone unethical business conduct by franchisees or agents of the Company. They focus in the short-term is on continuing to grow and learn in this part of the world (the Middle East) before embarking on further expansions internationally, this is not about plastering the Tim Hortons brand everywhere, this is about taking the brand where it makes sense and where we can further build. Under dynamic leadership, the company is reviewing its priorities and ways that it can boost its reputation with both domestic and international coffee drinkers. Already Tim Hortons can be found in the United Arab Emirates, Oman and Kuwait, which collectively have 33 locations. Nearly three years ago, Tim Hortons signed license agreement with the Apparel Group that would install up to 120 multi-format stores to be opened in the United Arab Emirates, Qatar, Bahrain, Kuwait and Oman over five years. At home, Tim Hortons is facing pressure from competitors like Starbucks and the McDonald's McCafe line which are luring customers with different choices and a broad range of prices. In some areas, Tim Hortons has fallen behind. Starbucks reported last month that 11 per cent of its sales in the U.S. and Canada come through technology built into its mobile app. Tim Hortons has an app called "Timmy Me," but it doesn't allow customers to pay with it. They need to embrace technology to leverage scale and reach and further enhance the experience of their guests. "The restaurant industry will continue to operate in this new reality of low growth with competitive intensity," he added. Tim Hortons still sells eight out of 10 coffees served by Canadian businesses, and its leadership position remains an advantage in a competitive market, one of those plans will focus on younger customers who demand more complex coffee drinks and a broader food selection.
It wouldn't say that they have lost touch with the younger consumer but think we can do perhaps a bit more to keep them engaged with their brand. They will need to further embrace the trial of healthier options by offering a more of these balanced choices.

TIM HORTONS – FINANCIAL STAND
In its financial results, Tim Hortons said third-quarter profits grew, even though the results still fell short of analyst expectations. It earned $113.9 million, or 75 cents per share, up from $105.7 million a year earlier, or 68 cents a share. On an adjusted basis, earnings were 75 cents per share, two cents shorter than analysts expected, according to a poll by Thomson Reuters. Tim's revenue did come in nearly a million dollars ahead of estimates, rising nearly three per cent from a year earlier to $825.3 million, up from $802.0 million a year earlier. In Canada, same-store sales grew 1.7 per cent as customers spent more per visit, mainly due to an increase in prices. Same-store sales are an important metric for their tail that factors in locations open for at least a year.
In the United States, same-store sales increased three per cent on more transactions. The company spent notably less on corporate reorganization. About $1 million went towards the initiative, compared to $8.6 million a year ago when it booked costs from a change in its chief executive officer and other fees.
In support of the strategic initiatives outlined above, the Company has established the following aspirations beyond 2014, from 2015 to 2018: * EPS: 11%-13% compounded annual growth rate; * Collectively, they plan to open more than 800 locations in North America and the GCC (between 2014 and 2018); * Cumulative free cash flow1 of approximately $2 billion; * They expect to reduce total capital intensity of the business as the plan progresses, and are targeting to improve return on assets and total return to shareholders. * Executive compensation measures have been changed to better align with the strategy, shareholder value creation and same-store sales growth, which is directly linked to the success of our partnership with our franchise community.

The results of each of the Canadian and U.S. business units includes substantially all restaurant-facing activities, such as: (i) rents and royalties; (ii) product sales through our supply chain as well as an allocation of supply chain income driven primarily by the business units’ respective system wide sales; (iii) franchise fees; (iv) corporate restaurants;

BURGER KING – TIM HORTONS merge
The world's third largest quick service restaurant company. Tim Hortons Inc. and Burger King Worldwide Inc. Burger King Worldwide announced a definitive agreement under which the two companies will create a new global powerhouse in the quick service restaurant sector. With approximately $23 billion in system sales, over 18,000 restaurants in 100 countries and two strong, thriving, independent brands, the new company will have an extensive international footprint and significant growth potential. The new global company will be based in Canada, the largest market of the combined company.
Tim Hortons and Burger King each have strong franchisee networks and iconic brands that are loved by their guests. Following the closing of the transaction, each brand will be managed independently, while benefitting from global scale and reach and sharing of best practices that will come with common ownership by the new company.
Under the terms of the transaction, which has been solidly approved by the Board of Directors of both companies, Tim Hortons shareholders will receive C$65.50 in cash and 0.8025 common shares of the new company per Tim Hortons share. Based on Burger King's unaffected closing stock price as of August 22, 2014, this represents total value per Tim Hortons share of C$89.32 and based on Burger King's closing stock price as of August 25, 2014, this represents total value per Tim Hortons share of C$94.05. As an alternative to the default mixed transaction consideration described above, each Tim Hortons shareholder will have the ability to elect to instead receive, for each Tim Hortons share held, either (i) C$88.50 in cash; or (ii) 3.0879 common shares of the new company, in each case subject to pro ration.
The C$89.32 unaffected offer value represents a premium of 39% based on the volume weighted average price of Tim Hortons stock over the past 30 days ending Friday August 22, 2014, and a 30% premium based on Tim Hortons closing stock price on August 22, 2014. By receiving shares in the new parent company, Tim Hortons shareholders will have the opportunity to participate in the new company's long-term value creation potential.

new management & goverance
At the time of closing, Alex Behring, Executive Chairman of Burger King and Managing Partner at 3G Capital, will lead the new global company as Executive Chairman and Director. Marc Caira, President and CEO of Tim Hortons, will be appointed Vice-Chairman and a Director, focused on overall group strategy and global business development. Daniel Schwartz, CEO of Burger King, will become Group CEO of the new company, with overall day-to-day management and operational accountability. The new company's board will include the current eight Burger King Directors and three directors to be appointed by Tim Hortons, including Mr. Caira.
Mr. Caira and Mr. Schwartz will continue as Tim Hortons and Burger King CEOs, respectively, through the transition period, and additional executives in the new global company structure will be identified from Burger King and Tim Hortons during the transition period and announced at the time of closing. Both Burger King and Tim Hortons will continue to operate after the closing as standalone, independent brands which leverage global shared services and best practices.
The current Tim Hortons headquarters in Oakville, Ontario will continue to be the global home of the Tim Hortons business. Burger King's current headquarters in Miami, Florida will continue to be the global home of the Burger King business. It is expected that the shares of the new parent company will be listed on the New York Stock Exchange and the Toronto Stock Exchange. commitment to society
Tim Hortons will continue to manage its own operations, headquartered in Oakville, and continue its significant community involvement, including the Tim Horton Children's Foundation, TimBits Minor Sports Program, Tim Hortons Coffee Partnership and its community, sustainability and charitable programs. This transaction will not change the way Tim Hortons works with its franchisees or its business model. There are no plans to change the rents, royalty structures, customer-facing programs, Franchise Advisory Board or the franchisee-facing operational resources Tim Hortons provides to support its franchisees in building their businesses. Likewise, there will be no changes to restaurant-level employment and the new company will rely heavily on the Tim Hortons talent pool to staff the new organization at all levels of responsibility. As a result, the global company's management and shared services operations will consist of a meaningful number of Canada-based executives.
Similarly, Burger King will continue to support and preserve its long-standing commitment to local communities and charitable causes in the United States, including the Burger King Scholars Program. 3g and hathaway – role
3G Capital and its principals have a proven track record of investing in and growing iconic brands. Over the years, it has partnered with other long-term investors in previous transactions to build shareholder value and drive innovation and growth in its companies.
3G Capital will retain all of its investment in Burger King by converting its roughly 70% equity stake in Burger King into equity of the new company. On a pro forma basis, 3G Capital is expected to own approximately 51% of the new company with the balance of the common shares to be held by current public shareholders of Burger King and Tim Hortons.
The combination generates substantial value for shareholders of both companies and provides the opportunity for shareholders to participate in the new company's long-term value creation potential. In addition to meaningful revenue synergies created from accelerated international growth, the transaction is expected to achieve cost savings through leveraging the new company's global scale and the sharing and implementation of best practices.
Upon completion of the transaction, each outstanding common share of Burger King will be converted into 0.99 of a share of the parent company and 0.01 of a unit of a newly formed Ontario limited partnership controlled by the new parent company, however, holders of shares of Burger King common stock will be given the right to elect to receive only partnership units in lieu of common shares of the new parent company, subject to a limit on the maximum number of partnership units that can be issued.
The partnership units will be convertible on a 1:1 basis into common shares of the new parent company, however, the units may not be exchanged for common shares for the first year following the closing of the transaction. Holders of partnership units will participate in the votes of shareholders of the new parent company on a pro-rata basis as though the units had been converted. 3G Capital has committed to elect to receive only partnership units.
The transaction is expected to be taxable, for U.S. federal income tax purposes, to the shareholders of Burger King, other than with respect to the partnership units received by them in the transaction. The transaction is expected to be taxable to shareholders of Tim Hortons in the U.S and Canada.
Burger King has obtained commitments for $12.5 billion of financing to fund the cash portion of the transaction, including commitments for a $9.5 billion debt financing package led by JP Morgan and Wells Fargo. The obligation of JP Morgan and Wells Fargo to provide this committed debt financing is subject to a number of customary conditions, including execution and delivery of certain definitive documentation. It is expected that the debt financing for the transaction will consist of a $6.75 billion senior secured term loan B facility, a $500 million senior secured revolving credit facility and senior secured second-lien notes in the amount of $2.25 billion.
Berkshire Hathaway has committed $3 billion of preferred equity financing. Berkshire is simply a financing source and will not have any participation in the management and operation of the business.
The transaction is subject to customary closing conditions, including approval of Tim Hortons shareholders and receipt of certain antitrust and regulatory approvals in Canada and the U.S. Since 3G Capital already owns approximately 70% of the shares of Burger King and has committed to vote in favor of the combination, no shareholder vote is required of Burger King shareholders.
Both companies' boards of directors have unanimously determined that the proposed combination is in the best interests of their respective companies. Each of RBC Capital Markets and Citi has delivered a fairness opinion to the board of directors of Tim Hortons, and Lazard has delivered a fairness opinion to the board of directors of Burger King.

international operations – new firm
There's nothing negative here about Tim Hortons in Canada, adding there are no plans to have the two chains sell each other’s products — hamburgers in Tim Hortons and Tims coffee in Burger King, for example. They not going to see any interaction between the restaurants.
Executives from the companies involved also poured cold water on theories that the move was an elaborate tax inversion chiefly designed to bring down Burger King's tax rate. Canada's basic corporate tax rate is about 26 per cent, while the U.S.'s is around 35 per cent.
But Burger King already managed to get its tax rate down to 27.5 per cent last year, company filings show. Tim Hortons paid 26.8 per cent tax in Canada last year, according the it’s annual report.
They don't expect our tax rate to change materially. Burger King will continue to pay federal, state and local taxes on U.S. earnings, as will Tim Hortons keep paying Canadian taxes, Schwartz reiterated. Tim Hortons plans 800 more restaurants, if the deal goes through as is, 3G would still control 51 per cent of the new company. Current Burger King shareholders would own 27 per cent, and current Tim Hortons shareholders would own the remaining 22 per cent.
Although Burger King has roughly twice as many locations as Tim Hortons, the Canadian chain takes in much more revenue from its stores. Tim Hortons says it controls 28 per cent of fast food sales in Canada, including 75 per cent of all coffee and caffeinated beverage sales. Although they didn't offer details and the combined company plans to pay a dividend — just as both the individual companies currently do.
The boards of both companies have unanimously approved the transaction. Two-thirds of Burger King is owned by 3G, so the deal has been consummated on that end, but Tim Hortons shareholders still have to approve it. The deal is subject to numerous regulatory and anti-trust hurdles, including the Investment Canada Act.

Burger King will be new CEO Shares in the new company will list both on the TSX and NYSE. Daniel Schwartz, CEO of Burger King, would also become CEO of the new company. Current Tim Hortons CEO Marc Caira would become a director of the new company, as well as its vice-chairman. The new company's board would include the current eight Burger King Directors and three Canadian directors to be appointed by Tim Hortons, including Caira. financial advisors
Lazard, J.P. Morgan and Wells Fargo served as financial advisors to Burger King. Kirkland & Ellis LLP, Davies Ward Phillips & Vineberg LLP and Paul, Weiss, Rifkind, Wharton & Garrison LLP served as legal counsel to Burger King. Citi and RBC Capital Markets are serving as financial advisors to Tim Hortons. Wachtell, Lipton, Rosen & Katz and Osler, Hoskin & Harcourt LLP are serving as legal counsel to Tim Hortons. tax issue - GOVERNMENT ROLE
Canada's Industry Department to determine whether the transaction was of so-called net benefit to the country. Under Canada's foreign-investment laws, foreign-led acquisitions of Canadian assets exceeding 354 million Canadian dollars ($322 million) are subject to a review to ensure they bring a so-called net benefit—such as guaranteeing a significant presence in Canada and local investment.
Canada has only blocked three deals since the current rules were implemented in 1985. Legal experts said a deal in the fast food sector should pass muster as it poses no national security concerns, and the new global company would be based in Canada, meaning additional tax revenue to federal coffers. Tim Hortons previously came under foreign ownership when it was acquired by U.S.-based Wendy's International Inc. in 1995. Wendy's spun off the Canadian operation in 2006, and Tim Hortons decided in 2009 to re-domicile to Canada to take advantage of lower corporate taxes.
Burger King has issued $2.25 billion worth of notes to help it gather funds that will aid its $11 billion purchase of coffee-and-doughnut chain Tim Hortons, in what looked to be a direct contention to a new tax deal crackdown set in motion by the U.S. Treasury Department.
Burger King's proposed $11.5 billion acquisition of Canada's Tim Hortons may offer big tax benefits to the U.S. fast food chain but the real tax winner is likely to be its controlling shareholder, 3G Capital. The New York investment firm is not only deferring a capital gains tax hit in the U.S. because of the deal structure, but is also poised to reap a multitude of dividend tax and other benefits by moving Burger King's domicile to Canada, tax experts on both sides of the border said.
The U.S Treasury Department will work on schemes to reduce the economic benefits of corporate inversions and possibly stop its application altogether. Inversions usually happen when companies try to avoid massive U.S. taxes. Among the Treasury Department's new rules state that former owners of the U.S. Company should own no more than 80 per cent of the new combined entity. Intercompany loans, or "hopscotch loans," as well as foreign undistributed earnings, regardless of the new combined entity, may be taxed.
But Burger King is only set to control 51 per cent of the new Canada-based firm that would manage the merger. Moreover, its shareholders will only own 27 per cent of the company, while Tim Hortons shareholders, 22 per cent. That alone already complies with the Treasury Department's new less-than-80-per cent rule, Ratings pointed out in a report released earlier. As to the hopscotch loans between Burger King and its new Canadian parent, believed Tim Hortons' cash flow is enough to cover the $9 billion debt that would partially fund the transaction.
The good strategic merit and though the near-term credit impact is negative, expects both parties to benefit from increased efficiencies of scale, brand diversification and multiple levers for future growth. Tim Hortons, which has also strongly advocated moving forward with the merger plan, was reported to have launched a hiring campaign to entice Canadians to apply at their local outlets.
The White House is considering a broad range of possible actions, ranging from a simple opinion letter from the Internal Revenue Service offering a new interpretation of existing tax law to a comprehensive executive order that deals with certain tax benefits of inversions. Several analysts are predicting the White House could turn to a familiar strategy and bar government contracts from going to companies that engage in inversions.
The merge in a tax-advantaged inversion deal drew quick condemnation from some lawmakers, increasing the pressure on the Obama administration to act. The discussions involving a high-profile American brand are elevating the issue at a critical time. Burger King is a household name, and this will focus the public's attention on this issue in a way that earlier inversions did not. In an inversion, a U.S. firm relocates, usually through a merger with a smaller company to a country where tax rates and rules are perceived to be friendlier, but it typically continues to be managed from the U.S. While inversions have occurred off and on for years, they are getting fresh attention in the Government amid a new wave of company departures.
The U.S. corporate tax rate is among the highest in the developed world, and it seeks to tax firms on their global income, not just their domestic profits like most other countries. But there is no quick resolution in sight, and Burger King's discussions signal that a race between companies and the government is on again after a late-summer lull in inversion announcements following White House efforts to spur a crackdown. Some Republicans have signaled they are open to a quick legislative fix. But so far the two sides remain far apart, and GOP lawmakers worry the issue is becoming overtly political. Many Republicans prefer a comprehensive tax-code rewrite to make the U.S. more attractive to businesses. They fear that anti-inversion restrictions under consideration could leave U.S. companies and workers worse off and have unintended consequences that will drive investment elsewhere.
The merger is being looked upon as a tax inversion strategy by Burger King, as the parent company’s headquarters are relocated to Ontario, Canada. Inversion will allow Burger King to transfer its money overseas to the parent company in Canada without paying additional U.S. taxes, but rather paying the lesser tax to the Canadian government. Canada’s federal tax rate of 15%, combined with Ontario’s corporate taxes of 11.5%, results in a combined tax rate of 26.5%. It will benefit the American company in tax savings, as it can use the saved money to reinvest in the businesses or to fund the dividends and share buybacks.
According to the company’s annual report of 2013, the U.S. and Canada together account for 58% of the company’s net EBITDA. The remaining 42% comes from other geographical segments. Assuming that this geographical percentage allocation is the same for net income, the company?s foreign profits come to around $98.15 million. This profit is taxed again at U.S. corporate tax rate of 35%, which amounts to $34.35 million in taxes. This value excludes the profits from Canada, including which the value can go slightly higher. This is a huge amount which the company might save as a result of its headquarters relocation to a tax-favorable location.
A wave of tax inversion cases this year, mostly involving the health care companies, has raised a concern in the U.S., and the country’s government is preparing for tax rule changes to curb the tax inversion practice. new firm – perfromance - forecasted Burger King has a lot of positives to take out from this deal. The merger with Tim Hortons provides Burger King with everything from incremental revenues to expansion scope, from tax savings to better menu resources. Even though it might not be enough to outpace the industry leaders, it might put them in a better position to shrink the gap. Moreover, this deal fits perfectly with the company’s new business model, where the American company focuses more on international expansion.
Although Tim Hortons has a strong brand appeal and unmatchable foothold in Canada, it struggled to have a major impact in the U.S. On the other hand, Burger King has been facing a lot of competitive activity in the States from the emerging fast-casual segment, as well as in the breakfast segment. Burger King serves the Starbucks’ owned Seattle’s Best coffee to compete against McDonald’s McCafe. In a market where coffee is a vital breakfast item, Burger King plans on expanding this segment to match the brand appeal of McDonald’s McCafe and Starbucks’ coffee. This merger could provide both the entities a major platform to strengthen their weak points.
Tim Hortons has more versatile food offerings for the breakfast segment that can help Burger king compete against the likes of McDonald’s, Dunkin’ Brands and Starbucks. Tim Hortons has more than double the number of McDonald’s restaurants in Canada, with better system-wide sales as well. Also, the company has over 70% share of baked goods market in Canada and more than 75% of Canadian coffee market, much ahead of Starbucks and McDonald’s. Tim Hortons’ dominance in Canada can provide more exposure to Burger King in the breakfast market. Moreover, Tim Hortons could provide Burger King with improved quality of coffee and innovative food items to strengthen its dominance in the breakfast and coffee segment.
Tim Hortons reported more than $3 billion in net revenues in 2013 at a steady growth rate and is consistent in its margins. However, it has struggled in the U.S., where food giants such as McDonald’s, Yum Brands, Dunkin’ Donuts and Starbucks have unmatchable dominance. On the Other hand, Burger King has accelerated its international expansion over the last couple of years, as it is witnessing sluggish growth in the domestic market. As mentioned before, the new company will have combined system-wide sales of $23 billion, with a prominent growth potential, to compete against the fast-food giants McDonald’s. McDonald’s reported around $28 billion net revenues in the fiscal 2013. The merger will not only provide a boost to the revenue growth, but help them in penetrating the Canadian market. Burger King has more than 7,000 restaurants in the U.S., leaving them with a little expansion growth in the domestic market. With around 280 restaurants in Canada, Burger King might look to expand its customer base in that region. innovation
Upon hearing that Burger King had purchased Tim Hortons and planned to move from its Florida headquarters to Canada, a fair reaction was: "To what extent are the two mega-corporations are going to merge?”. While we're not implying that this is an indicator, Tim Hortons' push of a Buffalo Crunch doughnut, and the addition of the Crispy Chicken Sandwich to Tim's menu pointed to a greater stress on the breakfast chain's lunchtime relevance.
In our very cool fantasy, however, the merger means much, much more. With our "food-first" mentality, we asked ourselves: "If the menus of Burger King and Tim Hortons were to be combined, would anything edible result?" – *(Worked individually for possible innovative product)
A Burger King break-fast sausage patty on a Tim Hortons maple dip donut:
The classic maple-and-sausage combination comes alive through the restaurant merger think of it as a McGriddle, just sweeter and a tad gooier. Tim's already offers a Maple Biscuit Breakfast Sandwich, but that's a tad too subtle for us.
Caramel-Bacon Iced Cappuccino: Perhaps you've fallen victim to the Tim Hortons Iced Capp craze, most recently falling in love with the recently released Oreo variety. Let us introduce the caramel-bacon Iced Capp Supreme, weaving Burger King's thick-cut, smoked bacon chopped into bits into a caramel-flavored Iced Capp. It sounds superior to the Erie County Fair's bacon lemonade, at least.
The Whopper Wrap: Burger King's calling-card is rather inflexible other than boasting a junior size and stacking patties, we suppose. Taking into account Tim Hortons' bread versatility, let's throw the 1/4-pound fire-grilled beef, tomatoes, lettuce, pickles and mayonnaise into a grilled whole-wheat tortilla for a health-conscious veneer.
Chicken, Apple, Cranberry and Timbit Garden-Fresh Salad:
In a quest to appear healthier than they actually are, Burger King has beefed up its salad menu in recent years and the Chicken, Apple and Cranberry Garden-Fresh Salad won't pack on the calories as aggressively as the A.1. Ultimate Bacon Cheeseburger. But you deserve at least a little treat, so choose a mélange of Timbits, halve them, and toss 'em on top. Our advice: Strawberry, Lemon or Blueberry.
"Chicken vs. the Egg" -- a play on BK's Spicy Chicken Sandwich:
We all experience those guilty moments where we're tempted to speed into the BK drive-thru and order four Spicy Chicken Sandwiches off the value menu (or maybe it's just me, but, whatever). Since Tim Hortons loves to toss an egg on everything, why not plop a fried egg, a healthy dose of chipotle mayonnaise and some thick pepper jack cheese on the spicy chicken? You'd at least have the answer to the oft-confounding "chicken vs. the egg" debate, and there'd be no shortage of flavor.
BK chicken strips with a coffee-honey mustard sauce: Look, it's not easy to include coffee as a flavor, particularly in sauces. While coffee-ranch and coffee-thousand island both sound revolting, the bitterness of the coffee should be assuaged a bit by the sweetness of the honey, making the coffee-honey mustard sauce at least semi-tolerable. Maybe.
Sour-cream glazed onion rings:
No doubt that this side would be risky, but Tim Hortons' sour-cream glazed doughnuts albeit in a stiffer, crunchier batter could complement an onion's bite. Your guess is as good as mine for the appropriate dipping sauce.

SURVEY – ONLINE AND IN-STORE
To study the people’s reaction and their mind-set on the Burger King – Tim Hortons merge deal. Conducted an online survey (https://kwiksurveys.com/app/rendersurvey.asp?sid=4xs83eh69ywz5ty429607) which was shared in Facebook and Twitter. Also two in-person survey has been conducted at Burger King, Hackensack, NJ and Tim Hortons, 42nd Street, NY on October 12th, 2014. Below are the list of question framed and its analysis. 1. 2. Your Nationality? 1. American 2. Canadian 3. Others 2. Gender? 1. Male 2. Female 3. Age Group? 1. Less than 21 2. 21 – 30 3. 30 – 50 4. Above 50 4. How many times you visit Burger King in a month? 1. Less Than 5 2. 5 – 10 3. More Than 10
5. How many times you visit Tim Hortons in a month? 1. Less Than 5 2. 5 – 10 3. More Than 10
6. What would you feel about the Burger King and Tim Hortons Merge Deal? 1. Strongly Disagree 2. Disagree 3. Agree 4. Strongly Agree
7. Who will be affected on quality and taste of food served? 1. Burger King 2. Tim Hortons
8. Do you expect any new innovative products after merge? 1. Yes 2. No
9. Do you want both (Burger King and Tim Hortons) products in a same shop? 1. Yes 2. No
10. Who will benefit more after merge? 1. Burger King 2. Tim Hortons
11. Please rate out of 5 based on the quality of service? Burger King - Tim Hortons -

Analysis:
Though it is very sensitive deal to happen in the food chain industry, it has many mixed reaction in customer end. There are around 1252 observation been analyzed from both online and in-person store visit.
1. It has been observed that 50:50 customers nationality as divided as US+CANADA and Others. So it is more evident toward the reaction of sensitive are equally spread.

2. The survey has been bagged the age group in four category and it’s been more evident that it contain all ages across nationalities.

3. The survey has been captured the gender which is the vital in market consumer attraction towards the products and it’s been more evident that it results in male slightly more than female.

4. The survey has been seized the number of visit by the consumers which is the vibrant in market sales share per day towards the revenue and it’s been more evident that it results in averagely 9 days a customer visits the Burger King for dining.
5. The survey has been netted the number of visit by the consumers which is the vibrant in market sales share per day towards the revenue and it’s been more evident that it results in averagely 8 days a customer visits the Tim Hortons for coffee and dounuts.

6. The survey has been obtained about the deal felt by the consumers which is the pulsating in mind set towards the brand image and it’s been more evident that it results in 70% of the people agree with the merge

7. The survey has been found on the impact of quality and taste felt by the consumers which is the vivacious of mind set towards the brand value and it’s been more evident that it results in 60% of the people said that Burger King will be affected.

8. The survey has been establish on the innovation of new products felt by the consumers which is the cheerful of mind set towards the brand status/ innovation and it’s been more evident that it results in 60% of the people said that they are expecting innovative product.

9. The survey has been institute on the both products should be placed in same shop and the consumers felt that more evident that it results in 60% of the people said that they want in same shop, it shows that customer need of both coffee, dounuts and burgers to be tasted in same time.

10. The survey has been instituted on who will be benefitted more that felt by the consumers which is the critical to know the market mind-set and it’s been more evident that it results in 60% of the people said that Burger King will be benefitted more than Tim Hortons. It would be sue the TAX issue of U.S government.
11. The survey has been taken on the base of quality service and its more evident that it results both Burger King and Tim Hortons have been able to sustain the quality above 4-star mark. It shows that the merge will help them to adopt more innovative methods to serve the product at it best in market against their rivalry.

The survey has been gained more diversity and that too in USA, Canada, India and few European countries. Also it gained many retweets in twitter, It’s has been mailed to Burger King and Tim Hortons’ PR and CEO’s office for comments, waiting for the reply.

On the conclusion, this survey has been more evident, though there has been some negative comments during the days of announcement, it’s been very cheerful for the consumers to look forward in their products and service. Since this is franchisee model, the owners of the Franchise shops are expecting some new type of business model where they can be more responsible than the present model.

conculsion
Better Resources to Compete against Fast-Casual Restaurants, The fast-casual segment is a fresh and rapidly growing concept, appealing to the health-conscious consumers. Brands such as Chipotle Mexican Grill, Panera Bread, Qdoba Mexican Grill and Baja Fresh are considered as the top restaurants in this category. Regional burger chains in the U.S. such as In-N-Out Burgers, Five Guys, Shake Shack are stealing a small portion of market share as well. According to the NPD group, the fast-casual segment saw an 8% rise in the guest count in the 12 month-period ended in November 2013, whereas traffic count was flat for quick service restaurants. )

Tim Hortons innovative menu items, well-established coffee and food offerings and dominance in Canada, might help Burger King in off-setting the damage done to its revenue growth by the competitive activity. Also, the brand appeal of Tim Hortons might lay a smooth platform for Burger King to regain the lost customer traffic. Also Tim Hortons will gain a global foot-print and able to expand their restaurant through franchisee model. Warren Buffet’s involvement will make this merge deal will be executed smoothly and U.S government will make it easy for Burger King in terms of Tax issues.
Overall, it is a blockbuster deal for Burger King in terms of growth opportunities, apart from tax saving strategy. It would be interesting to see how the combined company performs in near future.