MONTREAL — MTY Food Group Inc. is growing beyond the shopping mall food court with a $248-million stock-and-cash deal to buy Imvescor Restaurant Group Inc. and its full-service restaurant and grocery products businesses.
The friendly deal will bring together such MTY banners as Thai Express, Vanellis and Manchu Wok with Imvescor’s Baton Rouge, Pizza Delight and Scores restaurants to create a company with a portfolio of over 5,700 stores under 75 brands.
Under the deal, MTY (TSX:MTY) will pay $4.10 per share for Imvescor with the cash portion of the deal totalling about $50 million and the rest in stock.
The combined company is expected to generate about $2.9 billion in annual sales.
Imvescor (TSX:IRG) chairman Francois-Xavier Seigneur said joining forces with MTY creates opportunities for Imvescor shareholders from an offer he described as representing a “full and fair value.”
“This share exchange and cash deal provides our shareholders with…the opportunity to participate in the growth of a strong North American, Montreal-based company that will be better equipped to face the challenges that are in front of our industry,” he said in a conference call Tuesday.
MTY chief financial officer Eric Lefebvre said the deal represents a “compelling value proposition.”
“Both sets of shareholders will become owners in a more diversified business with more brands in more corners of the market and in more locations,” he told analysts.
MTY said it will gain experience and reach from Imvescor’s full-service restaurants, retail food business and network in the Maritimes.
Analyst Elizabeth Johnston of Laurentian Bank Securities said the deal is good for MTY, but undervalues Imvescor.
“Imvescor’s brands have a strong growth profile, with positive same-store sales growth and outlook for net new store openings,” she wrote in a report.
She recently pegged a takeout of Imvescor’s shares at $4.25 to $4.65 per share.
The companies said Tuesday the offer implies a 13.3 per cent premium to Imvescor’s 10-day volume weighted average before it disclosed it had received a non-binding expression of interest from an unidentified potential buyer on Oct. 26.
Imvescor shares fell 2.1 per cent at $4.09 in trading on the Toronto Stock Exchange, while MTY shares were down nearly five per cent at $51.88.
The deal requires approval by a two-third majority of vote by Imvescor shareholders in February, as well as regulatory approvals and other customary closing conditions. The deal is expected to close in March.
Imvescor shareholders, including directors and senior officers, representing roughly an 18 per cent stake in the company have entered into support and voting agreements to back the deal.
Ross Marowits, The Canadian Press