The offer price marks a premium of more than 53 per cent to Recipe’s last close. The shares have fallen 24 per cent this year on broader market weakness following monetary tightening by central banks across the world.

Buyout firms have doubled down on take-private dealmaking opportunities as lower valuations make it easier to lure businesses away from the stock market at bargain prices.

These firms spent a record US$226.5 billion on such transactions around the world in the first half of 2022, up 39 per cent from the same period last year, Dealogic data shows.

Fairfax’s take-private transactions in recent years include its stake in a 2018 deal for Regina-based pulse crop processor AGT.

Up until last year Toronto-based Fairfax also held a stake in the Arctic Gateway Group consortium; up until 2018 it had been a majority owner in steakhouse chain The Keg, now part of the Recipe group.

Recipe said it had entered into a letter of intent with Fairfax, adding its board would recommend shareholders vote in favour of a takeover once the deal was finalized.

Founded in 1883, Vaughan, Ont.-based Recipe’s brands also include Swiss Chalet, Harvey’s, St-Hubert, Montana’s and New York Fries, among others.

As of June-end, the company had over 1,200 restaurants in Canada, the U.S., Saudi Arabia, India and the United Arab Emirates.

— Reporting for Reuters by Niket Nishant in Bangalore. Includes files from Glacier FarmMedia Network staff.

The post Fairfax proposes takeover of Recipe dining group appeared first on Alberta Farmer Express.

The two companies said Tuesday a merger will afford them “synergistic opportunities in marketing, real estate and overall costs that will help further grow the Keg and Cara brands.”

Vaughan, Ont.-based Cara — which said it will change its corporate name “to reflect this new business composition” once the deal closes — will then add 106 Keg restuarants in Canada and the U.S. to its 1,259 other sites.

The Keg has 96 sites across all provinces except Prince Edward Island, plus 10 locations in the western and southern U.S.

The deal calls for Cara to pay Vancouver-based Keg Restaurants’ shareholders — majority owner Fairfax Financial Holdings and Keg CEO David Aisenstat — $200 million in all, of which $105 million will be in cash and the balance in Cara voting shares.

Cara also pledged up to $30 million more in cash if “certain financial milestones” are hit within the first three fiscal years after the deal closes.

The Keg Royalties Income Fund, which today gets a four per cent royalty on Keg restaurants’ gross sales in exchange for the use of Keg-related trademarks it owns, will “remain in its current form” and continue to collect Keg-related royalties after the merger.

Aisenstat is to remain with the merged company, become Cara’s vice-chairman and assume oversight also for three of Cara’s “higher-end casual” brands, The Bier Markt, the Landing Group and Milestones.

The Keg, the companies said, remains under Aisenstat’s leadership “without any change in management’s focus on the fund’s unitholders as key stakeholders in the business or the factors that have established The Keg brand’s leadership position and supported the consistent payment and growth of the royalty.”

Bill Gregson will remain as Cara’s CEO and president and as chairman of the Cara board, the companies said.

The Keg chain, which the two companies billed as “the leading full service restaurant chain in Canada,” today generates about $612.1 million in annual system sales and about $23.5 million in normalized earnings before interest, taxes, depreciation and amortization (EBITDA).

Cara, counting its deals in 2016 for the St-Hubert and Original Joe’s chains, said the deal will give it “best in class in full service, preeminence in the Quebec market with a strong retail capability and a strong western presence along with its historical strength in Ontario.”

Cara — whose other dining chains include Montana’s, Kelsey’s, East Side Mario’s, New York Fries, Burger’s Priest, Prime Pubs, State + Main, Elephant + Castle and Pickle Barrel — also said the deal for The Keg also puts it “on track to achieve the top end of its long-term (2020-22) system sales target.” — AGCanada.com Network

The post The Keg to merge into Swiss Chalet, Harvey’s parent appeared first on Alberta Farmer Express.

Cara, whose other chains in North America include Swiss Chalet and Harvey’s, announced last week it will pay $93 million for a majority ownership stake in Calgary-based Original Joe’s Franchise Group Inc., a subsidiary of Franworks Franchise Corp.

Of that sum, Original Joe’s plans to use $90 million to “re-acquire” the three chains’ trademarks and royalty rights from Vancouver-based Diversified Royalty Corp. (DIV), whose other trademarks in Canada include real estate brokerage chain Sutton and auto service chain Mr. Lube.

The deal is expected to close late this year, pending TSX and federal Competition Bureau and approvals, among other typical conditions being met.

“The decision to unwind our royalty relationship with Diversified was difficult; however, the opportunity to partner with Cara was attractive from a strategic and synergistic perspective,” Original Joe’s CEO and Franworks founder Derek Doke said in a release from Vaughan, Ont.-based Cara.

Doke, who launched Franworks in 2000 with two Original Joe’s restaurants, said the three-way deal relieves the parent firm of about $12.6 million in royalty payments to DIV per year, thus putting Franworks in a “solid financial position.”

Given the recent decline in crude oil values, DIV CEO Sean Morrison said the company felt Franworks’ “large Alberta-based restaurant exposure has put pressure on Franworks under its royalty structure,” which in turn could have had “a negative long-term impact” on DIV.

As of June 26, Original Joe’s operates 99 restaurants, include 66 Original Joe’s, 23 State and Main and 10 Elephant and Castle locations. Of the 99, 51 are in Alberta, 19 in British Columbia, nine in Ontario, eight in Saskatchewan, five in Manitoba and seven in the U.S.

The Original Joe’s head office will stay in Calgary under its existing management, the company said, “leveraging Cara where possible.”

Cara’s other dining chains include Kelsey’s, East Side Mario’s, Montana’s, Milestones, Prime Pubs, Bier Markt, New York Fries and Landing.

“The majority of Original Joe’s restaurants are located in Western Canada, an area where Cara is currently underrepresented,” Cara CEO Bill Gregson noted.

Cara, which last Friday also closed on a $537 million deal to buy Quebec rotisserie chicken dining chain and processor St-Hubert, “will now have greater geographic distribution across all of Canada,” Gregson said.

The Original Joe’s deal, he added, “provides us with an opportunity to combine our scale for cost savings and rely on a proven management team” led by Doke.

For its part, DIV’s Morrison said the company will use $15 million from the deal’s proceeds to pay down debt, leaving it with $75 million “to acquire additional royalty streams from growing, multi-location businesses and franchisors.” — AGCanada.com Network

The post Cara to buy control of Original Joe’s chains appeared first on Alberta Farmer Express.

The deal, expected to close this summer pending regulatory approvals, was cheered by analysts and investors. Shares in Vaughn, Ont.-based Cara, which went public a year ago, closed 9.4 per cent higher at $29.15 on the TSX.

“Given the potential synergies that exist, not only on the cost side but also on the top-line, we believe Cara has only increased its positioning as the dominant restaurant operator in Canada, and as an attractive consolidator going forward,” said Canaccord analyst Derek Dley, in a note.

Cara, Canada’s largest operator of full-service restaurants, had indicated it was looking to expand through acquisitions. And analysts had flagged privately-held St-Hubert as one of the most likely targets for Cara, which is controlled by dealmaker Prem Watsa’s Fairfax Financial Holdings.

Swiss Chalet and St-Hubert are both well known for their rotisserie chicken meals, but the two chains share little geographic overlap.

Of St-Hubert’s 117 restaurants, 108 are in Quebec, where Swiss Chalet does not have a presence. The remainder are in eastern Ontario and New Brunswick.

St-Hubert also operates food processing plants at Boisbriand and Blainville, Que. and distribution centres at Boisbriand and Anjou, Que.

About two thirds of its food processing sales are to “external” customers such as grocery chains, while the other third is in “internal” sales to the company’s restaurant network.

“There’s no retail to speak of really right now in Cara, and this team and the facilities they’ve got in Quebec are perfect for us and Quebec was the province we were most under-penetrated within, so we can use this to build not only more St-Hubert’s in Quebec, but other restaurants too,” said Fairfax president Paul Rivett.

Cara has said it wants to boost revenue to $2.5 billion-$3 billion in five to seven years, up from $1.7 billion in 2014.

“Major expansions”

The acquisition of St-Hubert is expected to move Cara much closer to that target. The Quebec firm’s restaurant and food processing businesses booked about $403 million and $225 million in 2015 sales respectively.

The deal also gives Cara an opportunity to expand its offerings through grocery chains, including Loblaw, Costco and Metro, where St-Hubert sells products such as marinades, pot pies and seasonings.

St-Hubert Group CEO Jean-Pierre Leger said the deal will also create jobs in Quebec, “since it will enable us to carry out major expansions of our food manufacturing facilities and sales throughout Canada.”

The provincial opposition Parti Quebecois, Coalition Avenir Quebec and Quebec Solidaire parties lined up Thursday in separate releases to criticize the deal, framing the Ontario firm’s investment as evidence of an unfavourable economic climate in Quebec.

But the province’s poultry producer association, les Eleveurs de volailles du Quebec (EVQ), predicted Thursday it will be business as usual for farmers supplying the St-Hubert operations.

Quoted by La terre de chez nous, the journal of Quebec’s Union des producteurs agricoles (UPA), EVQ president Pierre-Luc Leblanc said current farmer-suppliers already have unique expertise in providing birds to the rotisserie chain’s exact specs (2.25 kg each).

St-Hubert alone is the market for about 3.3 per cent of the 175 million chickens produced each year in Quebec, the EVQ said.

Cara, whose brands also include the Milestones, Montana’s, Kelsey’s, Bier Markt and East Side Mario’s restaurant chains, said it plans to fund the deal through a credit facility, raised to $700 million from $150 million.

It also said it will consider offering shares to eliminate or reduce the need for a two-year term loan, which is part of the credit facility.

— Reporting for Reuters by Euan Rocha in Toronto and Amrutha Gayathri in Bangalore. Includes files from AGCanada.com Network staff.

The post Cara to buy St-Hubert restaurant, food businesses appeared first on Alberta Farmer Express.

The plan — announced Friday by Egg Farmers of Canada, an industry group that manages nearly all of the country’s egg supply — comes as various fast-food and quick-service restaurant chains set targets for only buying eggs that come from cage-free hens.

“This isn’t something we’ve done because of companies making announcements,” said Roger Pelissero, a farmer at West Lincoln, Ont., southeast of Hamilton, and first vice-chair for the national group. “We always have in our mind what is best for our hens.”

The organization, which represents over 1,000 egg farms across the country, mapped out a plan that immediately commits egg farmers not to install any new conventional cage housing.

About 90 per cent of egg production in Canada is now in conventional housing, commonly known as battery cages, which are slightly larger than filing cabinet drawers and hold several birds each. About 10 per cent is in enriched housing, free-run, aviary or free-range formats.

The plan, to be overseen by a national working group in collaboration with the entire egg supply chain, calls for a shift to about a 50-50 mix in eight years, moving to about 85 per cent alternative over conventional in 15 years.

“All production would be in enriched housing, free-run, aviary or free-range by 2036, assuming the current market conditions prevail,” the organization said in a release, adding those projections “represent a realistic forecast of what is achievable.”

Manitoba Egg Farmers, for one, already announced in late 2013 it would ban the installation of new conventional cages beyond 2014.

Egg Farmers of Canada said it also hopes to discuss, with stakeholders and consumers, the benefits of the enriched-housing model, “which do not seem to be well or widely understood outside of the industry.”

Enriched housing provides birds with more space per bird than conventional battery cages, along with perches, scratching surfaces and private nesting boxes.

While not free-run or free-range, the enriched model is meant to maintain food safety, reduce mortalities, limit cannibalism and other aggressive behaviours and ensure adequate feed and water for all birds.

“This announcement is a huge shift and we’re confident the market will make it happen before 2036,” said Sayara Thurston, a campaigner with Humane Society International, adding that U.S. farmers have not made a similar pledge.

Egg Farmers of Canada’s announcement follows a pledge Monday from Restaurant Brands International (RBI), operator of the Tim Hortons and Burger King chains, that it would move to 100 per cent cage-free eggs for its Canadian, U.S. and Mexican stores by 2025.

Ontario-based Cara Operations, whose chains in Canada include Swiss Chalet, Harvey’s, Milestones, Montana’s, Kelsey’s, East Side Mario’s, New York Fries and others, announced Thursday some of its brands will shift toward cage-free egg supplies starting this year, with all brands transitioning by 2020.

Mercy for Animals, an animal welfare group known for its releases of undercover video from meat packing plants and barns, had specifically called out Swiss Chalet and Harvey’s in its announcement Monday hailing RBI’s move.

Chains such as Subway, McDonald’s, Wendy’s and Starbucks have made similar commitments in recent months, giving various time frames.

Mercy for Animals president Nathan Runkle, in a separate statement Friday, described the Egg Farmers timeline as “simply outrageous… If egg producers truly care about animal welfare, they shouldn’t allow animals to languish in crowded, filthy cages for decades on end.”

The two-decade target is intended to protect farmers from financial hardship, as non-conventional systems are more expensive, Pelissero said.

Canadian farmers will move to several alternatives, including larger cages with amenities like nesting boxes and perches; housing that allow hens access to the entire barn floor; and farms that allow them outdoors.

The Humane Society is disappointed Canadian farmers aren’t phasing out cages entirely as the difference in welfare between birds raised in any type of cage compared with other methods is “night and day,” Thurston said.

Pelissero said there are downsides to any system. Chickens that have too much freedom can peck each other to death.

Canada, which manages supply and prices, produces eggs mostly for its domestic market. Prices paid to farmers reflect costs of production, meaning that egg buyers and possibly consumers will absorb higher prices, Pelissero said.

Most of a farmer’s cost of production is from feed, however.

— Rod Nickel is a Reuters correspondent covering the agriculture and mining sectors from Winnipeg. Includes files from AGCanada.com Network staff.

CORRECTION, Feb. 9, 2016: A previous version of this story misidentified Manitoba Egg Farmers as “Manitoba Egg Producers.” We regret the error.

The post Egg farmers to phase out cage housing over 20 years appeared first on Alberta Farmer Express.