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Burger King is ruling a larger fast-food kingdom.

The U.S.-based restaurant chain made it official Tuesday announcing that it agreed to merge with the Canada-based Tim Hortons restaurant chain. The deal, worth about $11 billion, will create the world's third largest quick service restaurant company with about $23 billion in sales and more than 18,000 restaurants in 100 countries.

The new global company will be headquartered in Canada, but each brand will be managed independently, with Burger King retaining its U.S. offices in Miami, the two companies said in a joint statement.

The new base in Canada could allow Burger King (BKW) to reduce its U.S. tax bill -- a recent report by KPMG found that total tax costs in Canada are about 46% lower than in the U.S.

These so-called inversions allow companies to transfer money earned outside the U.S. to the parent company without paying additional U.S. taxes. As more companies have used inversions, President Obama and Congress have publicly criticized the moves because it cuts into U.S. tax revenue.

Tim Hortons' stock surged 10% in pre-market trading to $82.41 after gaining $11.88, or 18.9%, to close trading Monday in New York at $74.72. Burger King's stock rose more than 2% in pre-market trading after rising $5.29, or 19.5% to close at $32.40 on Monday.

Tim Hortons (THI) shareholders will get $65.50 in cash and 0.8025 common shares of the new company for each share owned, under the terms of the agreement.

"By bringing together our two iconic companies under common ownership, we are creating a global (quick service restaurant) powerhouse," said Alex Behring, executive chairman of Burger King and managing partner of 3G Capital, the majority owner of Burger King.

Behring will become executive chairman and director of the new company, while Burger King CEO Daniel Schwartz will become group CEO and handle day-to-day management, and Tim Hortons CEO Marc Caira, as vice-chairman and a director, will handle overall group strategy and global business development, the companies said.

The new company is expected to trade on the New York Stock Exchange and the Toronto Stock Exchange.

"As an independent brand within the new company, this transaction will enable us to move more quickly and efficiently to bring Tim Hortons iconic Canadian brand to a new global customer base," Caira said. "At the same time, our customers, employees, franchisees and fellow Canadians can all rest assured that Tim Hortons will still be Tim Hortons following this transaction, including our core values, employee and franchisee relationships, community support and fresh coffee."

Warren Buffett's investment firm Berkshire Hathaway committed $3 billion of preferred equity financing for the deal, but will not have any participation in the management and operation of the business, the companies said.

Contributing: The Associated Press

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