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Burger King in talks to buy Tim Hortons

Burger King Worldwide said it is in talks to buy Tim Hortons, the Canadian doughnut-and-coffee chain.

LM Otero/Associated Press/File

Burger King Worldwide said it is in talks to buy Tim Hortons, the Canadian doughnut-and-coffee chain.

NEW YORK — Burger King Worldwide Inc. said Sunday it is in talks to buy Tim Hortons Inc, the Canadian doughnut-and-coffee chain, in a potential deal that would create one of the world’s biggest fast-food chains.

If completed, the deal would mean the burger giant’s corporate headquarters would move to Canada. Under the expected terms of the deal, Burger King would create a corporate parent that would house both chains, which would be operated independently. Together, the two companies would have a market value of more than $18 billion.

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An agreement could be reached as soon as this week, a person briefed on the matter said.

Though the two companies are expected to argue that a merger would bring a host of strategic benefits, it raises the specter of yet another American company moving out of the country to reduce its tax rate.

So-called corporate inversions have become increasingly popular, though the practice has come under fire from Washington as the Obama administration and lawmakers have complained companies that do so are unfairly, though legally, cutting their tax bills.

Though most of the companies that have employed inversions are big drugmakers, Burger King would be one highly visible to consumers. One company in a similar position, the pharmacy chain Walgreen, have cited potential pressure from Main Street and Washington as a factor in forgoing a corporate relocation.

But people briefed on the deal negotiations said that the main driver in such a deal is not taxes. Burger King already pays a tax rate of roughly 27 percent and would shave off only a couple of percentage points by moving to Canada.

And Burger King does not have a significant amount of cash held abroad, these people said. Companies often pursue inversions to access their overseas cash operations without being hit by a big American tax bill.

One potential reason for the move may be to placate Canadian authorities. Deals in the country are governed by the Investment Canada Act, which allows the national government to block a merger if it is deemed not in the best interests of the country.

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