Tim Hortons shares have skyrocketed since news broke it's in merger talks with Burger King, but politicians on both sides of the border have expressed their misgivings about the fast-food takeover.

The companies confirmed late Sunday that they were discussing a takeover of Tim Hortons by Burger King.

They said the new entity would be based in Canada, which has a lower corporate tax rate than the U.S., especially for entities with large overseas earnings.

"It seems pretty clear why Burger King would want to move its headquarters to Canada. What's less clear is what Canadians get out of the deal," NDP industry critic Peggy Nash told QMI Agency in an e-mail.

"Like all Canadians, New Democrats want details about the potential takeover of a company that employs 100,000 people in our country. Any foreign takeover needs to pass a net benefit test and not just a Conservative government rubber stamp."

South of the border, a Democratic senator has taken a tougher stance against the merger, calling on Americans to boycott Burger King in favour of Wendy's and White Castle.

"Burger King's decision to abandon the United States means consumers should turn to Wendy's Old Fashioned Hamburgers or White Castle sliders. Burger King has always said, 'Have it Your Way'; well, my way is to support two Ohio companies that haven't abandoned their country or customers," Ohio Sen. Sherrod Brown said in a statement.

Brown, a member of the Senate finance committee, has proposed lowering the corporate tax rate in the U.S. to stop these "runaway corporations" from leaving town in search of "tax havens" like Canada.

The Conservative government used the news as an opportunity to boast about Canada's low business tax rate.

"By reducing business taxes we are creating jobs and boosting investment, making Canada one of the best country's in the world to do business," Jake Enwright, spokesman for Industry Minister James Moore, said.

Miller Tabak analyst Stephen Anderson predicted the proposed deal would face political backlash in both countries.

Anderson predicted many Canadians would oppose the beloved Tim Hortons brand falling into foreign hands -- a concern echoed by Nash at a press conference Monday.

"A lot of Canadians don't want that feeling of homeyness (and) comfort to change," she said.

What's more, Anderson noted that recent attempts by companies to make tax inversion deals have drawn the attention of U.S. President Barack Obama, who criticized a "herd mentality" by companies seeking such agreements.

Nevertheless, Anderson said he does not expect any antitrust hurdles since the chains serve different quick-service segments.

He said the deal would ultimately benefit both sides.

"Tims would gain access to a broader array of potential franchise partners in the U.S., while Burger King would gain a company with historically strong operations," Anderson wrote in a note to clients.

Shares of Tim Hortons were up nearly 20% to $75.23 on the New York Stock Exchange on Monday, while Burger King, which is majority owned by investment firm 3G Capital, rose more than 17% to $31.83.

-- With files from Reuters

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