Canada's foreign investment agency will review Burger King Worldwide Inc.'s agreement to purchase Tim Hortons Inc., following regular practice, Finance Minister Joe Oliver said today.
Burger King agreed to pay about $12.5-billion ($11.4-billion U.S.) for the coffee-and-doughnut chain, and said it would create a combined headquarters in Canada. The move, a so-called tax inversion, could potentially lower the merged company's tax rate.
"Canada has become a very attractive place for capital and for growing businesses," Oliver told reporters in Toronto. "This is an acquisition which will be evaluated by Investment Canada to determine whether it's a net benefit to the country," he said, referring to the review panel.
Canadian law says that foreign takeovers worth at least $354-million (Canadian) are examined "based on the long-term interests of the Canadian economy," Jake Enwright, spokesman for Industry Minister James Moore, said by telephone, without confirming a review has started.
Oliver didn't provide a timeline on how long the review would take. Under the law, Canada has 45 days to review deals once a foreign investor has applied for approval. The government can unilaterally extend the deadline by 30 days, and the investor must agree to any further extensions.
The takeover should be approved without major conditions according to Lawson Hunter, lawyer for Stikeman Elliott LLP in Ottawa and a former head of the Competition Bureau.
"It's pretty hard to see why it would be turned down," Hunter said. "I mean, the prime minister likes Tim Hortons, but I would think this will be treated as a pretty normal transaction."
The agreement also needs approval from Tim Hortons shareholders and U.S. antitrust authorities, the companies said today, adding they expect the takeover to be completed late this year or early next year.