In what could be a whopper of a deal for Tim Hortons, Burger King is in talks to buy the iconic Canadian company.
A joint statement by the companies says they hope to form a new corporation that would be based in Canada — although they would continue to operate as standalone brands.
Burger King is based in Miami; Tim Hortons headquarters are in Oakville, Ont.
If a merger is completed, the new company would become the world's third-largest quick-service restaurant chain, with more than 18,000 locations and sales of about $22 billion.
So what's behind the merger?
Business commentator Michael Hlinka said on CBC Toronto's Metro Morning on Monday that Burger King may be making a "tax inversion" play with this move.
He said the U.S. corporate tax rate is about 35 per cent, while Canada's is only 26 per cent.
"There's that extra nine per cent of value that they're right now giving away," said Hlinka.
By merging with a Canadian company and setting up a head office in Canada, U.S. companies can achieve significant tax savings, Hlinka said.
"You've got to merge with a company one-quarter your size ... then you can technically set up your headquarters in Canada, even though you still keep everybody in the United States. It's almost like a mailing address more than anything else."
He said a number of U.S. pharmaceutical companies have made similar moves in recent years.
Trying to keep up with McDonald's
Burger King may also be trying to keep pace with a key competitor, Hlinka said.
"McDonald's has become very serious about making a good cup of coffee in the past several years and Burger King hasn't really stepped up, so maybe this is how they're going to compete with McDonald's globally," he said.
So what's the upside for Tims?
"If Tim Hortons gets its coffee into all those Burger King stores worldwide, that would be absolutely huge for it, and I think that might be part of this strategy as well," he said.
The plan calls for Burger King's parent company — 3G Capital — to own most shares in the new outfit.
The company also says any transaction will be structured to deepen the connections each brand has with its customers, franchisees, employees and communities.
CBC's Michelle Cheung spoke to customers at a busy Tim Hortons location in downtown Toronto on Monday morning.
Jesse Babwa, a regular Tim Hortons customer, said he's concerned that a merger with the U.S. burger giant could erode Tim Hortons's unique Canadian flavour.
"I like that Tim Hortons has a lot of Canadian identify," he said. "And I hope it doesn't change too much from what it is now."
Hlinka however, doesn't believe a Burger King-Tim Hortons merger would mean big changes for the customer picking up his daily double-double. He said Burger King would be unwise to tinker with Tim Hortons successful model.
"Tim Hortons just had fantastic [earnings] results, they're making money, they're expanding their offerings, they're doing a lot of things right on the execution end," he said.
"This company just has this incredible momentum behind it that just makes the company work. It's worked for the past 45-50 years, it's going to be with us for another 45 or 50," he said.
"If you go through some of the underground food courts, there will be a lineup at Tim Hortons that will stretch seemingly around the block, meanwhile there's five other places selling coffee and people are just like, 'No, I'd rather wait for the Tim Hortons coffee.'"