The Spectacle Blog

Thoughts on the Burger King-Tim Horton’s Merger

By on 8.27.14 | 2:01AM

I am on vacation in my home and native land. Currently I am in Toronto and tomorrow I will travel to Ottawa where my grandmother will be celebrating her 95th birthday later this week.

The biggest story in Canada right now is the merger between Burger King and Tim Horton's with BK picking up stakes and moving its headquarters to Oakville, Ontario which is about 20 miles from Toronto. For those unfamiliar with Tim Horton's, it is to Canada what Dunkin Donuts is to this country, especially in Massachusetts. Indeed, when Canadian troops were in Afghanistan, a Tim Horton's opened in Kandahar province before closing in 2011 when Canadian troops began their withdrawal.

Today, I see it's become a big story stateside with the Obama Administration and key Democrats flame broiling mad about the whole thing. They accuse Burger King of dodging taxes through inversion. Obama has condemned companies who engage in this practice as "corporate deserters who renounce their citizenship to shield profits." Apparently, Obama doesn't believe in mobility of capital.

Tax inversion might be germane to other companies, but not Burger King whose corporate tax rate last year was 27.5%, well below the standard 35% rate whereas Tim Horton's tax rate up here in 2013 was 26.8%.

Obviously, the big winners are Tim Horton's stockholders whose shares went up nearly 40% in matter of 48 hours.

But this isn't the first time Tim Horton's has partnered with an American fast food chain. In 1995, Tim Horton's merged with Wendy's. But ten years later that partnership ended when Wendy's sold off Tim Horton's. Granted Wendy's didn't move its corporate headquarters north. All I am arguing that business relationships, like foreign alliances, are usually temporary. 

However, if buying a Whopper annoys the Obama Administration then I'll do it. Well, maybe I'll buy a salad instead. That will still annoy the White House even if Michelle Obama thinks it's a healthier option. 

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