Burger King said Friday it expects to be the new owner of Tim Hortons Inc in one week’s time.
The U.S. fast food giant and Canada’s biggest coffee chain are eyeing Dec. 12, or next Friday, as the closing date for the pair’s multibillion-dollar mega-merger after the controversial transaction won approval from Ottawa on Thursday.
A couple hurdles remain before then, including approval from Tim Hortons shareholders and the Ontario Superior Court of Justice.
A vote is scheduled for Tuesday, while Tim Hortons is advising stockholders to approve the $12.5 billion offer from Burger King.
“The board of directors of Tim Hortons has unanimously recommended that Tim Hortons shareholders … vote ‘FOR’ the transaction,” the coffee chain said in a release.
“As part of the new company, Tim Hortons has the opportunity to accelerate its growth internationally and bring the Tim Hortons experience to a new global customer base, while maintaining the brand’s core values, employee and franchisee relationships, community support and always fresh coffee,” the release said.
On Thursday, Industry Minister James Moore approved the deal, which was first announced in August. As a rule, Industry Canada reviews any foreign takeover over a certain value to determine whether the deal is a “net benefit” to the country.
“The result of this transaction is this new global company, with sales of more than $23 billion annually, which will now be based in Canada,” Moore said.
Some critics have warned that Burger King’s owners, Brazil-based 3G Capital, will implement deep cost cuts among other efforts to squeeze bigger profits out of the chain. Last month, Tim Hortons said it was raising prices on coffee and some select menu items.
In separate review, the Competition Bureau gave its consent in late October on the grounds that “a large number of competitors” still face off against Tims and Burger King in Canada, while there’s also “low barriers to entry in the fast food industry” for would-be rivals to join in.
Industry Canada attached more than half a dozen “commitments” Burger King must agree to as part of the approval, though. To start, Burger King must “work with” Tim Hortons franchisees to maintain “100 per cent” of existing employment at Canadian locations, Ottawa said.
Other conditions the U.S.-based fast-food giant must abide by include plans to expand Tims locations in the U.S. and internationally “at a significantly greater pace than currently planned.”
Additional commitments include continuing Tim Hortons’ charitable work, operating Tims as a “distinct” brand apart from Burger King and a promise to keep rents and fees currently paid by Canadian franchisees frozen for a five-year period.