Financial Management Assignment Example | Topics and Well Written Essays - 1500 words - 3

Financial Management - Assignment Example The merger will help reduce the cost of production of coffee, which is the main reason why the Burger King Company lagged behind in the industry. To illustrate further on this synergy, the BKW has found an already established partner in the field of coffee, which is a vital breakfast menu in America. The Burger King Company does not need to establish its own coffee brand from scratch since it now has a partner in that field. The partner already enjoys economic of sale from the massive client base it serves thus transferring the same to Burger King Worldwide. The merger will help BKW develop and strengthen the brand appeal to compete with McDonalds McCafe. The merger presents an opportunity for BKW to benefit from additional resources from Canada. This is because Tim Hortons highly dominates Canada’s market share of baked goods (with more than 70%) in comparison to other American companies. Tim Hortons also has 75% of the coffee market, which is much more than the combined mark et shares of Starbucks and McDonalds in Canada. Burger King can take advantage of Tim Hortons lead and use it to enhance its dominance in the country. Looking deeper into growth and Revenue enhancement, the merger presents better opportunities for expansion. Having recorded annual sales of at least 3 billion dollars last year, Tim Hortons enjoys an impressive growth rate and steady margins. On the other hand, Burger King has kept on struggling against domestic companies, despite its major presence of in the country. The company is more likely to experience growth by venturing outside the U.S. In terms of revenue enhancement, the merger will enable tax inversion, thus allowing Burger King to enjoy lower corporate tax in Canada. Tim Hortons enjoys a 15% federal tax rate and a 11.5% corporate tax rate in Ontario. These rates in Canada are significantly lower that the tax rates in America. A combined tax rate of 26.5%