Bank Of America Believes Tax Inversion Notice Should Not Derail Burger King Worldwide Inc's Acquisition Of Tim Hortons Inc.

In a report published Wednesday, Bank of America analyst Andrew M. Charles reiterated a Buy rating and $38.00 price target on Burger King Worldwide Inc (NYSE: BKW).

In the report, Bank of America noted, “On September 22nd, the US Treasury and IRS issued a joint notice outlining changes to various aspects of the tax code aiming to make tax inversions less financially attractive. While the Burger King proposed acquisition of Tim Hortons will result in a redomiciling of the company's headquarters and tax structure from the U.S. to Canada, the proposed acquisition is not driven by immediate tax savings, as Burger King and Tim Hortons have similar effective tax rates,and we do not expect yesterday's notice to derail the deal.

"We also note Burger King's shareholder vote has effectively taken place as 3G Capital, 69% holder of Burger King shares, has indicated its intention to vote for the approval of the deal while we believe Tim Hortons shareholders will likely also approve the deal given the significant offer price relative to where shares traded before the announcement. Tim Hortons holders would own 22% of the pro-forma company upon completion, satisfying the 80/20 provision that holders of the target company own at least 20% of the new company. In addition, there are no contingencies in the deal agreement that would call-off the transaction if tax laws were to change and the vast majority of Burger King' cash is held within the United States.”

Burger King Worldwide Inc closed on Tuesday at $30.23.