A restaurant firm with well known brands in Eastern Canada’s casual dining market is set to merge into a neighbouring firm behind the franchises populating many of Canada’s mall food courts.
Montreal-based MTY Food Group announced Tuesday it has a cash-and-stock agreement in place to pick up all outstanding common shares of another Montreal firm, Imvescor Restaurant Group, for the equivalent of $4.10 per share, or about $248 million.
MTY’s assets include almost 70 full-service restaurant and food-court brands operating worldwide, including Taco Time, Mr. Sub, Country Style, Cultures, Muffin Plus, Extreme Pita, Cold Stone Creamery, La Diperie, Blimpie, Pinkberry, Jugo Juice and TCBY among others.
Imvescor, meanwhile, includes the casual dining chain Baton Rouge in Quebec, Ontario and Nova Scotia; Pizza Delight, mainly in Atlantic Canada; casual/family dining chains Scores and Toujours Mikes, mainly in Quebec; and breakfast/lunch chain Ben + Florentine, operating in Quebec with recent moves west into Ontario and Winnipeg.
Merging the two companies is expected to create a “multi-brand industry leader” with over 5,700 stores under 75 brands and about $2.9 billion in system sales.
MTY has been in steady expansion mode for years, taking up existing restaurant chains and brands including Steak Frites St-Paul, Giorgio Ristorante, The Works, Houston Avenue Bar + Grill, Industria Pizzeria + Bar, Dagwoods, The Counter Custom Burgers and Built Custom Burgers in 2017 alone.
“The combination of the two companies’ portfolios and expertise will produce tremendous opportunities for North American growth,” MTY CEO Stanley Ma said Tuesday in a joint release with Imvescor.
“Further, Imvescor’s suite of full service restaurants will be highly complementary to our existing business and is expected to enable significant top-line synergies for our existing full service restaurant brands as well as for the newly acquired brands.”
The deal calls for Imvescor shareholders to get about 20 per cent of their consideration in cash and about 80 per cent in MTY common shares, worth an overall premium of about 13 per cent to Imvescor shares’ 10-day volume weighted average price on Oct. 26.
Imvescor closed its deal to buy the Ben + Florentine chain in February. Earlier this month it also closed a $4.25 million deal to sell its vegetarian prepared meals business, Groupe Commensal, to a company led by businessman George Kyres, who heads Montreal processor In Foods, which makes snacks and prepared side dishes for retailers.
An earlier deal to sell Commensal to another buyer, Pasta Romana Foods, fell through in September. Imvescor had moved to sell Commensal in the aim of an “asset light business structure” focused on its restaurant franchises and related retail food products.
The deal “fully recognizes the value of our portfolio of restaurant brands and rewards investors for their patience as we have successfully executed our turnaround strategy,” Imvescor board chairman Francois-Xavier Seigneur said in Tuesday’s release.
Imvescor’s board, he said, “is unanimous in its recommendation that this transaction is in the best interests of all shareholders. We reached this conclusion following a detailed review and rigorous process that explored the strategic alternatives available to us.”
Imvescor CEO Frank Hennessey, in the same release, said the deal will leave the business “better positioned to invest in our brands and our people as part of a combined company with expanded resources and reach.”
The deal is expected to close in the first half of 2018, and will be structured as an “amalgamation,” requiring approval of 66.67 per cent of votes cast by Imvescor shareholders at a special meeting expected to be held in February.
The deal also provides for an $8 million termination fee, payable to MTY, if the transaction doesn’t proceed “in certain circumstances.” — AGCanada.com Network