The jury is out as to how much of the Burger King-Tim Horton merger is driven by the desire for tax savings. So far, the range seems to be modestly to not very much. The Los Angeles Times noted “Burger King’s overall effective tax rate in 2013 was 27.5%, according to its annual report. Tim Hortons’ effective tax rate for the same year was 26.8%.” That hardly seems motivation for a deal valued at almost $12 billion. More likely, creating a competitor to fast food’s No. 1, McDonald’s, was the driving force. The merger creates the world’s third-largest fast-food company.
Before we proceed, you might want to get a better understanding of the details of this transaction: Read my colleague Matt Levine’s excellent Warren Buffett Funds Global Donut-Burger Behemoth; for a good history of tax inversions, see this quick take.
As we have discussed, I find corporate inversions to be rather distasteful, and suggested several simple steps to make them less desirable to corporate America.
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