Merger Case Study Of Tim Hortons

Ah, A Tim Horton’s double-double. This north of the border slang refers to a steamy coffee with double cream, double sugar, and to top it off, a beautifully glazed maple donut. This is a staple snack of the gray, cold, Canadian morning. What could make it better, you ask? A multi-billion dollar Canadian-American merger of course! This is huge news, as it has enormous implications for both entities, as well as the mega-company that they will become. According to Forbes, Tim Hortons has 4,546 restaurants across Canada and the U.S., and has had a 9% increase in revenues from Q2 2013 to Q2 2014. However, Burger King hasn’t been as lucky. They suffered a 6% reduction in revenue during the same year-long span, and a stock price of $26 before the
Forbes points out that by merging with Tim Horton’s and having their new headquarters in Toronto, they are getting a huge tax break due to Canada’s lower corporate tax rate. This was definitely a calculated, strategic move on Burger King’s part. Another benefit that Burger King is reaping from this deal is more places to source their food from, which definitely cuts cost. This merger also allows Burger King to get a foothold in the super competitive breakfast food market. Tim Hortons has such a grip and dominance over the Canadian breakfast market, that they can help ease Burger King into the market, as well as give Burger King new menu options for breakfast. Finally, Tim Hortons can give Burger King better quality coffee, as opposed to the primordial sludge that Burger King was trying to pass off as “coffee” before. This merger also seems to fit like a puzzle piece from a numbers standpoint. According to Forbes, Burger King has over 7,000 restaurants in the U.S. and only 281 in Canada. Meanwhile, Tim Hortons is the reciprocal of that ratio. They have 3,588 locations in Canada, and only 859 in the U.S. This seems like a perfect opportunity for these to powerhouses to merge and have a North American takeover. This also will support Burger King’s push to expand their brand internationally. Forbes also states that the new merge will add up to $23 billion in sales. All in all, this looks like a pretty solid deal for both parties. Like I just said, this has all the makings to be a blockbuster deal for both parties, but this article was published on August 29th of 2014, which is 3 days after the merger was made official, on the 26th. It’s been a little over a year since then, so let’s see how this gargantuan deal has fared since