Burger King is one step closer to acquiring Tim Hortons after the federal government approved the two companies’ proposed merger, saying it meets the provisions of the Investment Canada Act.

Burger King and Tim Hortons entered into a friendly takeover agreement last August, with the American burger giant offering to pay more than $12 billion in cash and stock for the Canadian donuts-and-coffee chain.

"The result of this transaction is this new global company, with sales of more than $23 billion annually, which will now be based in Canada,” Industry Minister James Moore said in a statement.

“Our government is pleased to see companies like Burger King investing in Canada's economy and looking to benefit from our low taxes and open markets."

After the review, Burger King agreed to meet specific obligations, including:

To maintain “100 per cent” of existing employment levels at Tim Hortons stores across Canada.

To grow Tim Hortons “at a significantly greater pace than currently planned,” by opening new restaurants in the United States and around the world.

To locate the new company’s headquarters in Oakville, Ont., and “to maintain significant employment levels” at the facility.

That Tim Hortons remain a distinct brand and not be “co-branded” with Burger King locations in either the U.S. or Canada.

The new company must hold current rent and royalty structure levels for Canadian franchisees for five years, and maintain “100 per cent” of Tim Hortons’ charitable work and community involvement.

The new company will also be listed on the TSX, and Canadians must make up at least 50 per cent of the board of directors for the Tim Hortons brand.

The federal Competition Bureau approved the deal in October.

The deal’s final hurdle, shareholder approval, will likely be cleared when they vote on the proposed deal at a special meeting on Dec. 9.

If approved, the company headquarters will be in Oakville, Ont., where Tim Hortons is currently based.

The deal will create the world’s third-largest fast-food restaurant company, with some 18,000 locations in 100 countries.

But just over a month ago, the Canadian Centre for Policy Alternatives warned in a report that a Burger King takeover of Tim Hortons could result in lost jobs as the main investor, 3G Capital, seeks to cut costs.

More than 700 employees could be thrown out of work, the report warned, as 3G grapples with the newly formed company’s debt load.