What's the big deal on the Tim Hortons deal?
Tuesday, Sep 02, 2014 12:00 pm
As I sat at my desk, sipping a French vanilla flavoured cappuccino from an iconic red and brown cardboard cup on Tuesday morning, I started wondering to myself if the merger between Tim Hortons and Burger King could have any effect on my coffee drinking habits.
As soon as it was announced that Tim Hortons was officially sold to the American giant last week, people started taking to social media to express their disapproval for the deal.
I scratched my head, and wondered if any of this negative feedback was truly validated. My instincts told me that Tim Hortons probably wasn’t as Canadian as people thought, so I decided to do a little bit of Internet research on the issue.
The first article I found had funny, although somewhat gag-inducing, photos of Timbits stuffed in a hamburger bun. The article reported that the merger could result in the world’s third largest fast food company – something I thought rather impressive.
It was also being reported that the new company would likely be based at the current Tim Hortons headquarters in Ontario, leading me to believe that maybe this is a good thing for Canada and a possible boon to the economy.
For people who own shares in Tim Hortons, it was also reported as being a good thing as the deal increased the value of those shares by 39 per cent over the average price in the month leading up to the deal.
Some people have been floating around the idea that the deal is going on for the sake of a tax inversion for Burger King. Some of my research pointed out that Canada’s basic corporate tax rate is about 10 per cent lower than the rate in the U.S. Of course, there were arguments to dispute this claim, but I still couldn’t see how it would affect Canadians in a negative way. And as I understand it, Burger King doesn’t get handed a “get out of jail free” card simply because it will moves its headquarters north of the border.
Although Tim Hortons is a regular staple in many communities across Canada, I didn’t realize how huge the company was until I started reading some of these news stories. According to one report, the chain controls 75 per cent of all coffee and caffeinated beverage sales in Canada – another impressive feat.
I can’t find anything to validate why people are so offended by the deal. Although I only dedicated a portion of my morning to researching the topic, from what I gather, the deal won’t affect how people get their favourite double-double in the morning, and the company even confirmed it would continue to support Timbit hockey.
Although Tim Hortons was founded in Canada, the business history of the company crossed the border back in the 1990s, confirming my original instincts. Yes, Tim Hortons is a Canadian staple, but despite the multi-billion dollar deal week, I would guess most Canadians will continue to claim the restaurant chain as their own and continue to get their regular dose of caffeine and doughnuts.