Restaurant operator Foodtastic Inc. has offered to acquire Canadian franchisor MTY Food Group Inc. for about C$1 billion ($720 million), according to a letter reviewed by Bloomberg News, after two earlier approaches were rebuffed. Foodtastic is offering C$43 a share for MTY, which controls brands such as Cold Stone Creamery, Wetzel's Pretzels and Thai Express. The proposal represents a 32% premium to MTY's closing share price on Oct. 30 and values the company at about C$1.5 billion including debt.
MTY announced Tuesday that Chief Executive Officer Eric Lefebvre has been replaced by director Victor E. Mandel, effective immediately. The company's shares closed up about 1% at $32.75 on Monday, giving MTY a market value of about C$748 million. In pre-market trading on Tuesday, the shares leapt about 22%.
Foodtastic, led by CEO Peter Mammas, approached MTY twice over the past month but was rebuffed without an explanation or substantive discussions, according to the letter. "We are therefore disappointed that MTY has rejected the proposed transaction without engaging in substantive dialogue," Mammas said. The approach comes weeks after MTY ended a strategic review that considered a sale of all or part of the company. Its board concluded that pursuing the existing business plan would deliver more value to shareholders. MTY's same-store sales fell 1.9% during the 13 weeks ended Aug. 30, and normalized adjusted EBITDA fell to C$60.8 million from C$74 million.
Foodtastic, which operates more than 1,200 restaurants across about 30 brands, says it would fund the deal with its financial backers, with financing expected to be secured when a final agreement is signed. A spokesperson for MTY did not immediately respond to a request for comment.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing