MONTREAL -- MTY Food Group Inc. and Imvescor Restaurant Group Inc. announced today that they have entered into a definitive combination agreement under which a wholly owned subsidiary of MTY will acquire all of the outstanding Imvescor common shares for $4.10 per Imvescor Share, representing a total consideration of approximately $248 million, subject to customary closing conditions including receipt of regulatory and Imvescor shareholder approvals.
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Under the terms of the Transaction, Imvescor shareholders will receive an aggregate consideration which will consist of approximately 20% in cash and approximately 80% in MTY common shares. The purchase price per Imvescor Share implies a premium of 13.3% to the unaffected 10-day volume weighted average price on October 26, 2017 (the day prior to Imvescor's press release regarding its receipt of a non-binding indication of interest from a third party).
The combination of MTY and Imvescor will create a multi-brand industry leader with a portfolio of over 5,700 stores under 75 brands and approximately $2.9 billion in System Sales with significant runway for growth. MTY like Imvescor, has a scalable multi-brand franchised network, a proven ability to generate high EBITDA margins and maximize EBITDA conversion into free cash flow that will allow the continued investment in the business and pursuit of growth initiatives and acquisition strategy.
Stanley Ma, Chairman of the board of directors, President and Chief Executive Officer of MTY said, "This is an important day in the history of MTY as we add many great brands to MTY's existing portfolio. The combination of the two companies' portfolios and expertise will produce tremendous opportunities for North American growth. 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. Imvescor's expertise for retail operations combined with MTY significant range of products is expected to produce great opportunities in the future."
Frank Hennessey, Chief Executive Officer of Imvescor said, "This is the natural next step for our company. In an increasingly competitive operating environment, we will be better positioned to invest in our brands and our people as part of a combined company with expanded resources and reach. The Transaction offers shareholders, franchisees, employees and other stakeholders of both companies a significant opportunity for value creation."
Under the terms of the Transaction, Imvescor shareholders will receive approximately $50 million in cash and the remainder in common shares of MTY, equivalent to $0.8259 in cash and 0.0626 common share of MTY for each Imvescor Share held, such that the aggregate consideration paid to Imvescor shareholders will consist of approximately 20% in cash and approximately 80% in MTY common shares.
In connection with the Transaction, approximately 3.8 million common shares of MTY will be issued based on a reference price of $52.26 consisting of the 10-day volume weighted average price of the common shares of MTY on December 8, 2017, will represent a pro forma ownership of approximately 15% of the outstanding common shares of MTY upon closing of the Transaction. At which time, Imvescor will also have one nominee on MTY's Board of Directors. The Transaction offers Imvescor's Canadian shareholders the opportunity to participate in the combined upside by rolling over their common shares in a tax deferred manner.
MTY has structured the financing of the Transaction consideration in order to maintain a strong and flexible balance sheet and remains committed to pursuing its acquisition strategy. MTY has access to aggregate committed bank facilities from its existing lending syndicate to finance the cash portion of the Transaction consideration. The combined company is expected to continue to generate significant cash flow, providing liquidity to pursue future M&A opportunities and allowing for deleveraging.
The Transaction will be structured as an amalgamation and will be subject to the approval of 66 2/3% of the votes cast by Imvescor shareholders present in person or represented by proxy at the special meeting of Imvescor shareholders expected to be held in February 2018. In addition to Imvescor shareholder approval, the Transaction is subject to regulatory approvals, approval by the TSX for the listing of MTY common shares to be issued, and certain other customary closing conditions.
The Agreement between Imvescor and MTY provides for a non-solicitation covenant in favour of MTY. A termination fee of $8 million is also payable to MTY in certain circumstances. Closing of the Transaction is expected to occur in the first half of calendar year 2018. There is no assurance the Transaction will be completed as described above or at all, or that the anticipated closing date will materialize.
Financial and Legal Advisors
GMP Securities L.P. is acting as financial advisor to Imvescor and Ernst & Young LLP is acting as independent financial advisor to the Special Committee of Imvescor. Stikeman Elliott LLP is acting as legal advisor to Imvescor. Fasken Martineau DuMoulin LLP is acting as legal advisor to MTY.
MTY Food Group Inc. is a Canadian public company headquartered in Montreal, Quebec. MTY franchises and operates restaurants worldwide under the following banners: Tiki-Ming, Sukiyaki, La Crémière, Au Vieux Duluth Express, Carrefour Oriental, Panini Pizza Pasta, Franx Supreme, Croissant Plus, Villa Madina, Cultures, Thaï Express, Vanellis, Kim Chi, "TCBY", Sushi Shop, Koya Japan, Vie & Nam, Tandori, O'Burger, Tutti Frutti, Taco Time, Country Style, Buns Master, Valentine, Jugo Juice, Mr. Sub, Koryo Korean Barbeque, Mr. Souvlaki, Sushi Go, Mucho Burrito, Extreme Pita, PurBlendz, ThaïZone, Madisons New York Grill & Bar, Café Dépôt, Muffin Plus, Sushi-Man, Fabrika, Van Houtte, Manchu Wok, Wasabi Grill & Noodle and SenseAsian, Tosto, Big Smoke Burger, Cold Stone Creamery, Blimpie, Surf City Squeeze, The Great Steak & Potato Company, NrGize Lifestyle Café, Samurai Sam's Teriyaki Grill, Frullati Café & Bakery, Rollerz, Johnnie`s New York Pizzeria, Ranch One, America's Taco Shop, Cereality, Tasti D-Lite, Planet Smoothie, Maui Wowi, Pinkberry, Baja Fresh Mexican Grill, La Salsa Fresh Mexican Grill, La Diperie, Steak Frites St-Paul, Giorgio Ristorante, The Works Gourmet Burger Bistro, Houston Avenue Bar & Grill, Industria Pizzeria + Bar, The Counter Custom Bugers, and Built Custom Burgers.
Imvescor Restaurant Group Inc. is a dynamic and innovative organization in the family and casual dining restaurant industry. The Company is a franchise and licensing business that operates restaurants in Eastern Canada under five banners: Bâton Rouge®, operating in Québec, Ontario and Nova Scotia in the casual dining segment, Pizza Delight®, operating primarily in Atlantic Canada, in the family/mid-scale segment, Scores® and Toujours Mikes, operating primarily in Québec in the family and casual dining segments and the take-out and delivery segments, and Ben & Florentine®, operating primarily in Québec, with individual stores in Ontario and Manitoba, in the breakfast and lunch industry. The Company also licenses to third parties the right to manufacture and sell prepared food products under the Bâton Rouge®, Pizza Delight®, Scores® and Toujours Mikes brands.
SOURCE MTY Food Group Inc.
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