Burger King to gobble doughnut chain Tim Hortons

Shares in both companies jumped yesterday on news that they are in merger talks

(GETTY IMAGES)

Burger King could create the world’s third largest fast food chain if talks with Canadian coffee and doughnut chain Tim Hortons are successful.

The burger giant is eyeing a deal to creates a company with a stock market value of about $18 billion (£10.9bn) headquartered in Canada, where corporate taxes are lower.

The merger is the latest in a series of so-called “tax inversion” deals by US firms which have been criticised by the US government.

It is understood Burger King's majority shareholder 3G Capital would stay in overall control if a deal is completed with Tim Hortons, which was owned by US fast-food chain Wendy's before it was spun off in 2006.

It is expected that the chains will retain their brands but share back office services to cut costs.

Burger King's shares were up by 19.5 per cent and those in Tim Hortons by 19 per cent at the close of the US stock market yesterday.