Burger King shares were up as much as 22% Monday on news the fast-food chain was in talks to buy Canadian doughnut giant Tim Hortons in a deal that would see Burger King headquarters move to Canada to avoid U.S. taxes.
The Wall Street Journal reported late Sunday that the home of the Whopper was hoping to execute a “tax inversion” deal that would allow for savings on foreign earnings and cash and in some cases a lower overall corporate tax rate.
Tax inversion deals have surged this year as cash-flush companies prioritise acquisition targets beyond the reach of U.S. levies. The Obama administration is well aware of the strategy and has urged Congress to pass legislation that would disincentivize businesses from trying to pull it off. Here’s the chart:
If consummated, the deal would create the world’s third-largest fast-food chain.
Tim Hortons was up 18%.
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