In a potential whopper of a deal, 3G Capital-backed Burger King (NYSE: BKW) is in discussions to acquire fellow North American food giant Tim Hortons (NYSE: THI), the companies confirmed this week. Under the standalone brands, the new formation would create the world’s third-largest quick service restaurant company, with roughly $22 billion in combined sales and 18,000 restaurants in 100 countries. An agreement could reportedly be reached this week.
3G Capital has been Burger King’s majority owner since 2010, when it acquired the then-struggling chain in a $3.25 billion LBO. The firm, known for its cost-cutting measures, brought BK back to market in 2012 and has reportedly tripled its profit margin. 3G would claim majority ownership of the new publicly listed company on a pro forma basis, and the remainder would be held by existing shareholders in the companies.
According to a statement, the combined company’s headquarters would be based in Canada, making Burger King the latest U.S. corporation to seek tax inversion. As this deal involves an iconic American brand, there has been speculation the move could spark government action against the legal-yet-scrutinized moves. Either way, stock spiked Monday in response to the news: Burger King closed at $32.40 (up 19.5%) and Tim Hortons followed at $74.72 (up 18.9%).