On Sunday, the restaurant chain said that it was negotiating to acquire the Canadian coffee and donut chain Tim Hortons. If it were to take place, the deal would create one the biggest fast food companies in the world.
In addition, if completed the corporate headquarters for Burger King would move from the U.S. to Canada as another U.S. based company looks to switch its tax domicile to lower it bill.
Under the current terms that are being discussed, a new parent company would be created by Burger King, which would be operated independently. Together both companies would have a market value of over $18 billion.
Sources said an agreement could be forthcoming this week. Though both companies would argue a merger would bring many new strategic benefits, it would also count as a corporate inversion.
Many companies from the U.S. have looked at acquiring foreign corporations and then changing their headquarters to another country to help lower their tax bill.
The inversions, as they are called have become popular, even though in Washington, Congress members are upset, as the White House and lawmakers complain that companies are doing so unfairly, albeit legally, by cutting their tax bills.
This practice gained traction when Pfizer, one of corporate America’s biggest names, pursued an acquisition of AstraZeneca in an attempt to find a tax rate that was lower Britain.
The Secretary of the Treasury, Jacob Lew said recently that the Obama administration would determining if a harder line on the inversions is needed and that it had already identified possible ways in which to block the tax flight of the corporations, without legislation needed by Congress.
Though the majority of businesses using the inversions are large pharmaceuticals like AbbVie, Burger King would be the most visible to all consumers.
Walgreens, a company in a position that is similar to Burger King, cited pressure from Washington and Main Street as a reason for not completely a corporate inversion.
The corporate tax rate in the U.S. is 35%, while in Canada it is just 15%.