The Motley Fool

1 Big Reason to Buy Tim Hortons Inc. as the Merger Becomes Official

The merger between Burger King Worldwide Inc. (NYSE: BKW) and Tim Hortons Inc. (TSX: THI)(NYSE: THI) is pretty much a done deal, with only one small hurdle to clear.

This past Tuesday Tim Hortons shareholders voted in favour of the merger, after last week the federal government issued its stamp of approval. On Thursday, lawyers for Tim Hortons and Burger King requested final approval from an Ontario Superior Court of Justice, and approval is widely expected.

Restaurant Brands International will be the corporate name for the new company that will own both Tim Hortons and Burger King, and the company will trade on the NYSE and the TSX under the ticker QSR.

Short-term panic, long-term gain

When the merger was first announced, it was met with some panic, with Canadians lamenting the loss of another Canadian company to a larger international corporation, while others were concerned the changes would mean that we could no longer enjoy ordering a “large double-double,” a coffee that has become as much of a Canadian cultural icon as maple syrup and hockey.

This panic was unnecessary. In terms of Tim Horton’s presence in Canada, little change will be seen. The major difference will be that Tim Hortons will become a global brand.

Power in size

After large success in Canada, Tim Hortons has tried to expand internationally, but this expansion has been met with mixed success. In order to grow to the next level, international success is a must for the company, and under the umbrella of Burger King the likelihood of this future success has increased.

Burger King was interested in Tim Hortons for the company’s international potential, and has been quite open about the fact that the company will expand to other markets. Burger King has a presence in almost 100 countries around the world, and its experience in how to run a successful restaurant chain in different economies greatly increases the success potential, compared to Tim Hortons going it alone.

Long-run potential

Tim Horton’s growth potential in Canada is slowing but there is high potential in international markets. Burger King has the size and experience in global expansion, and its purchase of Tim Hortons gives the coffee maker a much better chance at a successful global expansion, which could result in better returns for investors. If you want to get in on these future profits, now is the time to buy Tim Hortons stock, or the stock of the combined company once Tim Hortons ceases trading independently.

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Fool contributor Leia Klingel has no position in any stocks mentioned.

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