Burger King Faces US Tax Backlash On Takeover
Burger King's decision to move its tax base from the US to Canada has resulted in boycott threats from angry US customers.
Its $11bn takeover of the popular Tim Hortons coffee-and-doughnut chain, which is being part-funded by billionaire investor Warren Buffett's Berkshire Hathaway, will see Burger King's corporate headquarters shift to Canada.
While investors showed great appetite for the deal - with shares in both firms rising more than 20% on Monday when news of the tie-up first emerged - some of the burger chain's US customers found the so-called tax inversion aspect hard to swallow.
The deal, which creates the world's third-largest fast food restaurant firm with 18,000 restaurants in 100 countries and about $23bn in sales, will aid the expansion of both brands as it will significantly cut Burger King's tax burden.
A recent report by KPMG found total tax costs in Canada are 46.4% lower than those in the US.
President Barack Obama and Congress have criticised inversions because they mean a loss of corporate tax revenue for the US government.
White House spokesman Josh Earnest would not comment on Burger King's announcement on Monday, but said the president generally believed it was unfair for companies to pursue a tax inversion merely to pay less in taxes.
By Tuesday morning, Burger King's Facebook page had more than 4,500 mostly negative comments about the deal.
One customer, Monica Marsh, wrote: "I eat at Burger King about twice a month or so, but if you buy Tim Hortons and move your headquarters to Canada to reduce how much you pay in American corporate taxes, I will reduce how much I spend of my American dollars and find a new burger joint to frequent."
A representative for Burger King, Miguel Piedra, said the comments on Burger King's Facebook page represented a small fraction of the company's more than seven million followers on the social media site.
A growing number of politicians also joined the criticism, with Ohio Senator Sherrod Brown (D) calling for a boycott.
Burger King is not the first company to face fallout over a tax inversion.
Pharmaceutical firm AbbVie and Valeant Pharmaceuticals have recently pursued such deals to cut their costs.
Earlier this month, Walgreen abandoned plans to pursue a tax inversion after negative publicity about the planned move.
Burger King said its purchase of Tim Hortons would result in the combined firm's stock being traded on the New York Stock Exchange in a dual listing in Toronto though they would continue to operate as separate brands.