According to a recent study published by the Canadian Centre for Policy Alternatives, Canada could be losing more than they bargained for when they sold Tim Hortons to the American based fast food giant Burger King.
Throughout the study that detailed the many “overwhelmingly negative consequences for Canadians” in regards to the Tim Hortons-Burger King merger, it was made clear that this will most likely lead to many layoffs as well as cost cutting practises.
The study additionally found that the company behind the sale, 3G Capital, as not having the best interests in mind for Canadians who are employed by Tim Hortons.
According to CCPA senior economist David Macdonald, who was involved in the compiling of the study, “Without additional strong assurances from 3G Capital that no jobs will be lost … this may not be in the net benefit of Canada”.
In the report, it also discusses the massive debt it will take to finance the near $14 billion takeover of Tim Hortons, which will most likely force the company to lay off approximately 700 employees.
“This is the largest leveraged buyout in Canada-U.S. history for a restaurant chain. 3G Capital is taking out a loan in essence for 14 billion in equity and it’s expensive to pay the interest on that loan,” Macdonald said in an interview with CBC.
Of the 700 employees, the report stated that those affected would most likely be the higher paid positions of Tim Horton’s, with upwards of 44% of all Tim Hortons staff who do not work directly in restaurants being fired.
“The company 3G capital that is buying Tim Hortons and putting it together…actually has quite a strong history of job losses,” Macdonald told CBC’s Metro Morning in an interview.
During this interview, Macdonald pointed out that the layoffs during past corporate-takeovers by 3G saw huge loss of local based employment with 740 jobs lost at Heinz and 140 at Labatt.
“It’s likely something Tim Hortons employees will see particularly at the corporate level,” he remarked in the interview, echoing the report.
The report also suggested that the Brazilian investment firm could shuffle around its finances in an attempt to pay fewer taxes in Canada, which could cost the Canadian government upwards of $355 million in the first five years of the deal.
“And the interest is tax-deductible, so what that will mean is it will substantially reduce the profits of Tim Hortons and Burger King and therefore substantially reduce the amount of tax money that they pay.”
As in the past with other corporate takeovers, it seem that Canada is always paying the price for its lack of “Canadian” corporations at the expense of the US.