Burger King Tries To Buy A Canadian Coffee Store For Fun And Profit

This weekend, Burger King announced that it was negotiating to buy Canadian coffee-and-donut shop Tim Horton's. Tim Horton's says it wants to merge because of the "potential to leverage Burger King’s worldwide footprint," while Burger King says it wants to merge so more Canadians can suffer from explosive diarrhea.

The real reasons behind the merger, of course, are a bit more prosaic. "More prosaic than diarrhea?" you ask with undisguised skepticism. "More prosaic than diarrhea," we reply, with a smug sense of superiority twinkling behind our beady eyes. Allow us now to Wonksplain at you why Burger King wants to buy the Canadian version of Dunkin Donuts.

Okay, tell us why Burger King really wants to buy Tim Horton's.

It's buh-cuz of money, stupid! These are businesses, and they do business things so they can make money.

Are you seriously Wonkette's financial news explainer?

Yes, we are, and we'd appreciate a slightly more respectful tone, thanks. So what's going on here is Burger King is trying to pull off one of those nifty "tax inversion" things you might have recently heard about. To visualize what a tax inversion looks like, let your hand hang at your side. Now, fold all your fingers into a fist except the middle one -- leave that middle one sticking straight down. Got it? Then, rotate your arm to "invert" that outstretched middle finger in the direction of Washington, D.C.

Matthew Yglesias at Vox lays it all out, and you should read his piece if you're a boring person who likes boring words. For those of you who consider yourselves auditory learners, consider 1) learning to read like a goddamn grown-up, Jesus Christ, or 2) listening to this podcast on tax inversions from WBUR's OnPoint.

Got it, I will totally not read or listen to those things. Please just tell me what is going on, I have a meeting with Bill from marketing in 15 minutes.

Canada offers a lower corporate tax rate than the United States, and if Burger King can take over a Canadian company, it can tell the IRS that it's headquartered in Canada. "But how is that even possible?" you stammer, your eyes stinging as they're exposed to the light of truth for the first time. "That can't be true because Republican politicians have spent the last six years telling us that Canada is a poutine-ridden moonscape of godless bilingual socialism!" Indeed they have, but the accountants, shareholders, and management of Burger King apparently believe otherwise. Burger King wants to pay cheaper Canadian taxes, and it's trying to buy Tim Horton's so it can say it is headquartered in Canada with a straight face. That's really all this is about.

Why is Burger King doing this now?

Good question! It probably has something to do with the fact that a private equity firm, 3G Capital, bought Burger King back in 2010, then took them public again in 2012. Like all private equity firms, 3G Capital is lookin' to get PAID. And like all private equity firms, 3G Capital knows that it's way, way easier to suck the remaining value out of a once-viable corporation than to actually rebuild it in a sustainable way.

Burger King reported a first-quarter profit of $35.8 million [...] Revenue, which was down 42% at $327.7 millionm, came in ahead of analysts' expectations of $307 million, according to Thomson Reuters. Burger King's total operating costs fell 54%, with food, payroll and administrative expenses all dropping.

In case you big dumb idiot liberals didn't know, that's how capitalism works. Creative destruction, Obamanauts, look it up. For what it's worth (it's worth hundreds of millions of dollars), 3G Capital wants to do something similar to Heinz ketchup.

Wait, what is Tim Horton's again?

It's a chain of fast-casual restaurants that specializes in coffee and donuts -- think Dunkin Donuts with more polite service and without six packets of Splenda stuffed into an 8-oz. cup of coffee. Yr Wonkette's stepmom is Canadian, and she reliably informs us that, in Canada, a town is not really a town unless it boasts both a Tim Horton's and a Canadian Tire. True story.

And why do I care?

Because you are a snarky know-it-all liberal, and you love watching for-profit corporations behave like the soulless, amoral actors they are! The only other reason why you might care is because you become physically aroused by the thought of minimizing your favorite corporation's tax burden, and if you already know what the tax implications of this merger look like, then you probably didn't need to read this Wonksplainer.

This isn't very funny.

You're not very funny! You try digging a hearty belly laugh out of this story!

Okay: 'Markets Skeptical Of Burger King's Story About Hooking Up With This One Canadian Chick At Summer Camp.'


[Globe & Mail]

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