The Zacks Analyst Blog Highlights: Burger King Worldwide, Tim Hortons, Medtronic, Salix Pharmaceuticals and Mylan

For Immediate Release

Chicago, IL – September 24, 2014 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Burger King Worldwide, Inc. (BKW-Free Report), Tim Hortons Inc. (THI-Free Report), Medtronic, Inc. (MDT-Free Report), Salix Pharmaceuticals Ltd. (SLXP-Free Report) and Mylan, Inc. (MYL-Free Report).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Tuesday’s Analyst Blog:

Burger King-THI Deal in Focus as U.S. Curbs Tax Inversions

Burger King Worldwide, Inc. (BKW-Free Report) and Tim Hortons Inc.’s (THI-Free Report) proposed merger deal is once again in the limelight with the Obama administration taking several actions to curb tax inversion deals, effective immediately.

The U.S. Treasury Department will reportedly make it harder for U.S. companies seeking inversion to avoid paying taxes in the U.S. on earnings from international markets.

Effective immediately, the rule includes a ban on hopscotch loans that allow companies to access foreign cash without paying U.S. taxes. Now the Treasury Department plans to consider such loans as "U.S. property" and treat the money as a taxable dividend.

Also, they reportedly intend to sanction a new tax regulation that would limit the amount of debt a company can hold and use for the purpose of tax deductions. Currently, U.S. companies that invert through a merger are treated as domestic for tax purposes if the shareholders of the U.S.-based company own more than 80% of the combined company. The administration now intends to reduce that stake to 50%, subject to legislation.

All the rules target companies that seek to avoid U.S. taxes by shifting their headquarters abroad and thereby reduce the benefits of so-called corporate inversions. Tax inversion, a form of tax avoidance is the relocation of a corporation's headquarters to a lower-tax nation while retaining its material operations in the country of origin. Since taxes in the U.S. are higher, companies often opt for this option to lower tax bills.

Burger King, the second largest fast food hamburger chain in the world, and Tim Hortons, the largest coffee and doughnuts seller in Canada, had entered into a merger agreement last month. Though Burger King claimed that this is not a deal made to avoid paying taxes, investors speculate that Burger King opted for the merger to shift its headquarters to Canada in order to save taxes. Since then, the deal has faced criticism from all quarters for taking advantage of this loophole.

Of late, inversion deals have been on the rise. The new guidelines could also impact a number of pending mergers and acquisitions, which include a merger deal between Medtronic, Inc. (MDT-Free Report) and Covidien PLC; Salix Pharmaceuticals Ltd. (SLXP-Free Report) and Mylan, Inc. (MYL-Free Report) and also Chiquita Brands International Inc. and Fyffes plc. We will have to wait and see how these recent developments impact the companies in question.

Currently, Burger King as well as Tim Hortons both carry a Zacks Rank #3 (Hold).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

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