Foodtastic Inc. has made public its proposal to acquire all outstanding shares of MTY Food Group Inc. for 43 Canadian dollars a share in cash. The price represents a 32 percent premium to MTY’s closing price on October 30 and a 37 percent premium to its 30 day volume weighted average price, and it values MTY’s equity at about 982 million Canadian dollars, or about 1.5 billion Canadian dollars including debt. Those are different measures: the near 1 billion dollar headline is equity value, not enterprise value.
Foodtastic said it first communicated the proposal in writing on October 15 and reiterated it on October 20, only to be rebuffed. MTY, in its own statement on Tuesday, said it rejected the October proposals, formally terminated discussions, and entered into no agreement or arrangement in connection with them. MTY also noted that Foodtastic had previously been given multiple extensions of an exclusivity period during MTY’s strategic review, which the company ended on October 9, to secure financing and close a transaction.
The bidder’s letter argues that MTY has written down 220 million dollars of acquisition value since 2020 and that its shares have fallen over one, three and five year periods while restaurant indices rose. Subject to confirmatory due diligence, Foodtastic said the transaction would be fully committed at the signing of definitive agreements, financed by Foodtastic and its institutional relationship partners, and implemented by a statutory plan of arrangement. That means financing is not committed today, and a plan of arrangement requires the target board’s cooperation to proceed.
MTY franchises and operates more than 80 restaurant banners across 6,966 locations, including Thai Express, Wetzel’s Pretzels and Cold Stone Creamery. Foodtastic, also based in Montreal, has about 30 brands and nearly 1,200 establishments. On the same day, MTY named director Victor E. Mandel chief executive with immediate effect, replacing Eric Lefebvre, who stepped down by mutual agreement.