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Burger King stock soars on whopper of a tax deal
Source:
usatoday.com
- Aug 25, 2014
Burger King is working on a whopper of a business deal.
The burger chain is in talks with Canadian restaurant chain Tim Hortons about merging, a plan that, if accomplished, would create the world's third-largest fast food restaurant company, with more than 18,000 outlets in 100 countries and about $22 billion in system sales, the companies said in a statement.
Shares of Burger King (BKW) surge 23% in afternoon trading on the news that the companies were looking to create a new, publicly traded company headquartered in Canada.
With a new base in Canada, Burger King, now based in Miami, could shave its U.S. tax bill. Tax inversions have become increasingly popular among U.S. companies trying to cut costs.
In an inversion, a U.S. company reorganizes in a country with a lower tax rate by acquiring or merging with a company there. Inversions allow companies to transfer money earned overseas to the parent company without paying additional U.S. taxes. That money can be used to reinvest in the business or to fund dividends and buybacks, among other things.
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Category: General Business
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