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MTY Food Group Buys Imvescor Restaurant Group for US$193M and The Counter for US$25M

Scores restaurant

On December 12 Montreal-based MTY Food Group Inc. [TSX:MTY] announced that it has entered into yet another acquisition deal. Earlier this month it completed the acquisition of The Counter and in October it acquired Dagwoods Sandwiches and Salads. This time it is acquiring fellow Eastern Canada-based franchisor Imvescor Restaurant Group Inc. for C$248 million, which at current exchange rates is US$193 million. Imvescor will have one nominee on MTY’s board of directors.

Imvescor franchises family and casual dining restaurants in Eastern Canada under five brands — Baton Rouge, Pizza Delight, Scores, Toujours Mikes, and Ben & Florentine. The combination of MTY and Imvescor creates a multi-brand franchising firm with a combined portfolio of 75 brands with 5,700 locations, accounting for nearly US$2.26 billion (C$2.9 billion) in system-wide sales from which to draw royalties and revenue.

What MTY sees in Imvescor is a scalable multi-brand franchised network and high EBITDA margins that can be converted into free cash flow to pursue growth initiatives and more acquisitions.

François-Xavier Seigneur, chairman of the board of directors of Imvescor said, "Joining forces with MTY creates an opportunity for Imvescor shareholders to realize immediate value and participate in a faster pace of growth, with less risk. Today’s Transaction fully recognizes the value of our portfolio of restaurant brands and rewards investors for their patience as we have successfully executed our turnaround 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's significant range of products is expected to produce great opportunities in the future.”

MTY also buys The Counter and Built Custom Burgers

MTY announced earlier in the month, December 1, that it had completed the acquisitions of California-based franchisors CB Franchise Systems LLC and sister firm Built Franchise Systems LLC, doing business as The Counter and Built Custom Burgers.

Built Custom Burgers is the fast-casual version of The Counter. Both systems operate 41 franchised and 3 company-owned restaurants.

The deal is worth US$24.6 million, which includes US$0.9 million in working capital adjustment. A total of US$22.3 million was paid on closing and US$2.3 million was retained as holdback on the transaction. The consideration paid on closing was paid in cash, financed from MTY's cash on hand.

Ms. April Fogle, under the leadership of Mr. Jeff Smit, will lead both the The Counter and Built Custom Burgers companies. Franchising conglomerate MTY expects to move the Los Angeles headquarters of The Counter and Built Custom Burgers to MTY’s US headquarters in Scottsdale, Arizona, where its Kahala Brands subsidiary is located. Kahala franchises and manages such brands as Cold Stone Creamery, Blimpie, Pinkberry, Tasti D-Lite and Baja Fresh.

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