Burger King in talks to buy Tim Hortons

NEW YORK/TORONTO (Reuters) - Burger King is in talks to combine with Canadian coffee and doughnut chain Tim Hortons Inc , a deal that would create a fast food powerhouse with a combined market capitalization of roughly $18 billion.

The companies confirmed merger discussions late on Sunday and said the new company would be the world's third-largest quick service restaurant and be based in Canada.

The proposed deal would be structured as a tax inversion 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.

Recent attempts by companies for tax inversion deals, which are made to escape U.S. taxes and save money on foreign earnings and cash held outside the United States, have drawn the attention of President Barack Obama, who criticized a "herd mentality" by companies seeking such deals.

Walgreen Co recently decided against a tax inversion deal in its acquisition of European pharmacy chain Alliance Boots , saying it was "not in the best long-term interest of shareholders to attempt to re-domicile outside the U.S."

Burger King, founded in 1954 and headquartered in Miami, Florida operated 7,384 franchise restaurants and 52 company restaurants in the United States and Canada and has a market capitalization of ($9.55 billion)

Oakville, Canada-based Tim Hortons operates 3,588 system wide restaurants in Canada and 859 in the United States. Its U.S. market cap stands at about $8.37 billion.

(Additional reporting by Chuck Mikolajczak, Olivia Oran and Mike Stone; Editing by Leslie Adler and Stephen Coates)

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