The White House yesterday announced new rules aimed at slowing down a rash of tax inversion deals, in which U.S. companies buy a smaller foreign company for the purpose of shielding millions of dollars form Uncle Sam.
The most notable of these proposed transactions has been Miami, Fla.-based Burger King’s pending takeover of Canadian coffee-and-doughnut chain Tim Hortons, thus leading many news organizations to put images of the fast-food chain next to their coverage of the White House action. Like this from the Reuters homepage:
Or this from The Daily Beast:
But here’s the thing: Burger King’s deal for Tim Hortons would not be impacted on iota by the new rules.
Under terms of the proposed agreement, Burger King shareholders would hold less than 80% of the combined company — which is the threshold set yesterday by the White House. For example, Burger King’s current majority shareholder 3G Capital would see its stake cut from 69% to around 51%.
The White House has indicated interest in lowering that figure from 80% to 50%, but that would require Congress to actually pass a piece of corporate tax reform legislation (something that feels less likely than Burger King moving to a salad-only menu). So, for now, Burger King is little more than a recognizable stand-in for the more obscure pharmaceutical and medical device companies that are suffering actual heartburn today.
Sign up for Dan’s daily newsletter on deals and deal-makers: Get Term Sheet
