Canada’s federal industry minister has given his blessing to the planned takeover of iconic coffee-and-donut chain Tim Horton’s by U.S. fast food giant Burger King.
James Moore said Thursday his ministry has reviewed the proposed US$15.5 billion takeover, as the Investment Canada Act requires for such foreign investment transactions.
Through the review of Burger King’s application, he said, Miami-based Burger King Worldwide has agreed to commitments including managing Tim Hortons “as a distinct brand, without co-branding of any locations in Canada or in the U.S.”
Burger King, Moore said, has also pledged to work with Tim Hortons’ franchisees to maintain “100 per cent of existing employment levels” at Tim Hortons franchises across Canada.
The proposal now also calls for Burger King “to expand Tim Hortons by opening new restaurants, both in the U.S. and globally, at a significantly greater pace than currently planned.”
The headquarters of the combined company is to be set up at Oakville, Ont., maintaining “significant employment levels at that facility,” he said. The combined company is also to be listed on the TSX.
Canadian franchisees’ rent and royalty structure are to be maintained at “current levels” for a five-year period, he said.
The combined company has also pledged to maintain 100 per cent of Tim Hortons’ current charitable work and community involvement in Canada, and to have at least 50 per cent Canadian membership in the Tim Hortons brand’s board of directors.
“The result of this transaction is this new global company, with sales of more than $23 billion annually, which will now be based in Canada,” Moore said in a release.
The federal Competition Bureau in October issued a “no action” letter on the proposed merger.
The deal is “unlikely to result in a substantial lessening or prevention of competition” in the fast food sector, the bureau said — due in part to the “large number of competitors and the low barriers to entry” in the sector.
The deal, expected to close this year or in early 2015, still requires approval from Tim Hortons shareholders at a special meeting to be held Tuesday (Dec. 9) at Oakville. — AGCanada.com Network