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3 Reasons Why Burger King Should Buy Tim Hortons

NEW YORK (TheStreet) - Burger King (BKW) and Tim Hortons (THI) investors are certainly cheering the prospects of a merger between the fast-food burger chain and the Canadian doughnut-and-coffee outlet that could threaten McDonald's (MCD) supremacy in the quick-service food industry.

Shares of Burger King were surging 22% to $33.11, hitting a 52-week-high while Tim Hortons was rising 21% to $76.28, also hitting a new 52-week-high.

Burger King and Tim Hortons on Sunday disclosed that they're in discussions about a potential merger. If a new publicly-traded company is formed, it would be headquartered in Canada (Tim Hortons is based in Oakville, Ontario), making Burger King yet another U.S. company looking to move its headquarters out of the U.S., ostensibly to lower its tax rate. That's one reason equity traders appear to like the prospect for a merger.

But there are other reasons investors and consumers like this combination.

Watch the video below for more on what a merger of Burger King and Tim Hortons would mean:


WATCH: More market update videos on TheStreet TV

Tim Hortons operates 4,546 restaurants, mainly in Canada and in the U.S. Northeast while Burger King has more than 13,000 franchised locations in 98 countries. A combined Burger King and Tim Hortons would have 18,000 restaurants in 100 countries with about $22 billion in sales. The companies said a merger would create the world's third-largest fast-food restaurant company.

If a deal is consummated, Burger King and Tim Hortons would continue to operate as standalone brands, while "benefiting from shared corporate services, best practices and global scale and reach," the release says. "A key driver of these discussions is the potential to leverage Burger King's worldwide footprint and experience in global development to accelerate Tim Hortons' growth in international markets."

And while the two companies could probably create efficiencies in marketing, operations and streamlining their supply chains, here are three other reasons a deal could be yummy for both consumers and investors.


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