Newspaper article The Canadian Press

MTY Food Group Growing beyond the Food Court with Deal to Buy Imvescor for $248M

Newspaper article The Canadian Press

MTY Food Group Growing beyond the Food Court with Deal to Buy Imvescor for $248M

Article excerpt

MTY Food Group signs deal to buy Imvescor


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 (TSX:IRG) with the cash portion of the deal totalling about $50 million and the rest in stock.

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.

However, stock in both companies fell after the announcement.

MTY shares were down 4.71 per cent at $51.97 at the closing of markets Tuesday on the Toronto Stock Exchange, while Imvescor shares fell 2.63 per cent to $4.07.

Analyst Elizabeth Johnston of Laurentian Bank Securities said the deal is good for MTY, but undervalues Imvescor. She recently pegged a takeout of Imvescor's shares at $4.25 to $4.65 per share.

"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.

Imvescor 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." The combined company is expected to generate about $2.9 billion in annual sales.

"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. …

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