Burger King has officially cleared one more hurdle.
The CBC reported that the Canadian federal government has formally approved the merger between Burger King and Tim Hortons. The merger, once completed, will create a global entity with revenues in excess of $23 million.
The Canadian government approved the merger with the intent that the merger would benefit the iconic Canadian coffee and doughnut entity. To that end, the Canadian government asked for concessions and guarantees from Burger King, and Burger King agreed. Those guarantees include the following.
-Keep 100 percent of Tim Hortons workforce working.
-Preserve Tim Hortons charitable works
-Accelerate opening new Tim Hortons in the USA and worldwide.
-Establish the new company's corporate headquarters in Oakville, Ontario, and list the new company on the Toronto Stock Exchange.
-Manage Tim Hortons as a unique entity, without co-branding any locations anywhere.
-Maintaining current Canadian franchisee rent and royalty fee levels for the next five years.
-Guarantee that the Tim Hortons brand board of directors is represented by at least 50 percent Canadian citizens.
Canadian Industry Minister James Moore issued a statement approving the merger under the Investment Canada Act after the markets closed Thursday evening.
In the statement, Moore said, "Our government is pleased to see companies like Burger King investing in Canada's economy and looking to benefit from our low taxes and open markets."
The Wall Street Journal is reporting that the final two hurdles for Burger King to clear is approval from the Ontario Superior Court of Justice and shareholders for Tim Hortons, who must vote by end of business Tuesday, December 9. Burger King supporters feel the merger will be completed by the end of this year, or very early in 2015.
Burger King and Tim Hortons shareholders have by end of business Tuesday, December 9, to either cash out their shares or trade their old shares for shares in the new corporation.
The terms of the merger give shareholders three options: accept a combination of $65.50 (Canadian) and 0.8025 of a share in the new company for each old share, accept $85.50 (Canadian) for each old share, or accept 3.0879 shares in the new company for each share of the old company.
On October 28, the Canadian Competition Bureau approved the merger, stating the merger was "unlikely to result in a substantial lessening or prevention of competition."
Tim Hortons reported a 14 percent loss in profit for the most recent quarter. The reason given for the loss was costs incurred with the merger with Burger King.