TORONTO (Reuters) - Shares of Canadian coffee and doughnut chain Tim Hortons Inc and U.S. fast-food company Burger King surged in trading before the opening bell on Monday after news that they are in merger talks.

Burger King and Tim Hortons, comparable in size by market value, confirmed their merger discussions late on Sunday, saying the potential deal would create a fast-food powerhouse and that the new entity would be based in Canada.

Shares of Tim Hortons jumped more than 17 percent to $73.90 in trading before markets opened in New York on Monday, while Burger King, which is majority owned by investment firm 3G Capital, was up more than 15 percent at $31.30.