Canada has given itself the green light to decide on the Burger King/Tim Hortons merger.
The Wall Street Journal is reporting that the first major hurdle had been cleared recently. The Canadian Competition Committee, Canada’s anti-trust arm of the government, has decided that this merger should not hinder or hold back any other fast food businesses from prospering in Canada, given the ease of restaurant creation and ever-increasing number of growing opportunities.
The merger is expected to create a quick-serve food giant, garnering nearly $23 billion in system sales, with 18,000 restaurants within 100 countries. The merger would create a conglomerate with corporate offices in Oakville, Ontario, a suburb of Toronto.
Though the United States Treasury Department has made some alterations to its tax inversion laws, the merger will still be able to continue as planned. Some detractors are afraid that Burger King is making this move to alleviate its tax burden and not to expand globally. Having dealt with that situation, the merger bounced into Canada’s governmental committees for business regulation. The first committee, The Competition Committee, found no reason to delay or stop the merger.
There was also some trepidation that Burger King could bring a percentage of total profits to the corporate headquarters in Canada, and have that percentage repatriated if there is a tax treaty between the two countries exists, like it does between the U.S. and Canada. The Canadian Competition Committee didn’t seen any evidence of such behavior, thus clearing the way for the merger to complete. It was determined a small part of Burger King’s profits would be exempt.
Reuters is now reporting that since the Competition Committee has approved the $11.25 billion dollar merger ($12.64 billion Canadian), the Canadian government will now determine if the merger won’t upset the economic balance in Canada.
Canadian Industry Minister James Moore was asked when the Canadian government will visit the merger and decide on it, Moore replied, “Soon, soon.” When pressed for a more specific answer, Moore replied, “By Christmas.”
Essentially, it is Moore who must decide if the Burger King cash-and-stock takeover of Tim Hortons will be of benefit to Canada and its citizens.
Moore and Industry Canada has asked both corporations for an initial 45-day review period, then asked for the review to be extended for an additional 30 days. Constitution and antitrust law experts are downplaying any chance that the extension request is indicative of any issues Industry Canada and Moore could be having issues dealing with this decision.
[Image courtesy of the Canadian Press]
