Burger King may acquire Tim Hortons

Burger King is in talks to acquire Canadian coffee and doughnut chain Tim Hortons in a deal that would create a fast food powerhouse with a market capitalization of roughly $18 billion.

Burger King and Tim Hortons, comparable in size by market value, confirmed their merger discussions late on Sunday, saying the new company would be the world's third-largest quick service restaurant. It would be based in Canada, which has lower overall corporate taxes than the United States, especially for entities that have large amounts of earnings from overseas.

The proposed deal would be structured as a so-called tax inversion transaction to move Burger King's domicile out of the United States, and could come as soon as in the next few days, according to sources familiar with the discussions.

Tim Hortons and Burger King would operate as standalone brands within the new entity while benefiting from shared corporate services, the companies said. Burger King said its experience in building a large global footprint would allow it to help accelerate Tim Hortons's growth in international markets.

Burger King, founded in 1954 and headquartered in Miami, Fla., operates over 13,000 locations in nearly 100 countries and territories across the globe. It has a market capitalization of about $9.55 billion.

Oakville, Canada-based Tim Hortons operates more than 3,500 system wide restaurants in Canada and over 850 in the United States. Its U.S. market cap stands at about $8.4 billion.

Under the stewardship of new Chief Executive Marc Caira, Tim Hortons recently posted results that beat analyst estimates, as moves to introduce new, pricier menu items helped boost profits. The chain, which has struggled with a U.S. expansion in recent years, is fending off mounting pressure on its home turf from well-capitalized rivals such as McDonald's and Starbucks.