Burger King is ruling a larger fast-food kingdom.
The U.S.-based restaurant chain made it official Tuesday announcing that it agreed to merge with the Canada-based Tim Hortons restaurant chain. The deal, worth about $11 billion, will create the world's third largest quick service restaurant company with about $23 billion in sales and more than 18,000 restaurants in 100 countries.
The new global company will be headquartered in Canada, but each brand will be managed independently, with Burger King retaining its U.S. offices in Miami, the two companies said in a joint statement.
The new base in Canada could allow Burger King to reduce its U.S. tax bill -- a recent report by KPMG found that total tax costs in Canada are about 46% lower than in the U.S.
These so-called inversions allow companies to transfer money earned outside the U.S. to the parent company without paying additional U.S. taxes. As more companies have used inversions, Pres. Obama and Congress have publicly criticized the moves because it cuts into U.S. tax revenue.
Tim Hortons shareholders will get $65.50 in cash and 0.8025 common shares of the new company for each share owned, under the terms of the agreement.
"By bringing together our two iconic companies under common ownership, we are creating a global (quick service restaurant) powerhouse," said Alex Behring, executive chairman of Burger King and managing partner of 3G Capital, the majority owner of Burger King.
Warren Buffett's investment firm Berkshire Hathaway committed $3 billion of preferred equity financing for the deal, but will not have any participation in the management and operation of the business, the companies said.
"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."
Contributing: The Associated Press