Burger King announced on Sunday that it is currently in talks about buying Canadian coffee and doughnut chain, Tim Hortons, the New York Times reported.

If the deal is completed, it would create a powerhouse in the fast food industry with almost US$18 billion in market capitalization.

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The merger discussion was announced by Burger King and Tim Hortons, adding that if it goes through as planned, the corporate headquarters of Burger King would be transferred to Canada to serve as a "corporate parent" for both companies.

The new company is expected to be the "third-largest fast-food restaurant in the world."

The relocation of the headquarters would serve as a tax inversion move since Canada levies lower taxes for high earning companies.

 According to the two companies, Burger King's major shareholder, 3G Capital, will remain as the majority owner of the new merged company, while the rest of the shares will still be owned by the existing shareholders.

In a statement released by Barry Scwartz, Investment manager at Toronto's Baskin Financial, he said "with 3G's backing and smarts," the merger will mean "Tim Hortons is going to go full bore with a huge expansion into the U.S.,"

Even with a new corporate entity brought about by the merger, Burger King and Tim Hortons will still operate independently while taking advantage of its shared corporate benefits.

In a statement released by Burger King, it stated that it will help put Tim Hortons into the international market.

The acquisition of Tim Hortons by a foreign brand will not be unprecedented, as the Canadian company has been owned by Wendy's for years before returning to its Canadian roots in 2009.

Tagsburger king, tim hortons