Foodtastic Launches $1.5-Billion Hostile Takeover Bid for MTY Food Group
Foodtastic Inc., backed by Oaktree Capital Management, has made an unsolicited $43-per-share cash offer for MTY Food Group Inc., valuing the company at roughly $1 billion in equity and $1.5 billion including debt. The hostile bid follows MTY's decision to end a strategic review and remain independent, as well as the sudden resignation of CEO Eric Lefebvre.
Foodtastic Inc. has launched a hostile takeover bid for MTY Food Group Inc., offering $43 per share in cash. The proposal values MTY at approximately $1 billion on an equity basis and $1.5 billion including debt. The offer represents a 32-per-cent premium to MTY’s closing share price on Oct. 30.
Foodtastic is backed by funds managed by Oaktree Capital Management, L.P. and operates more than 1,200 restaurants across Canada under 27 brands. MTY operates more than 80 restaurant brands across 7,000 different locations. A successful acquisition could create a Canadian fast-food and casual-dining behemoth.
The unsolicited bid arrives amid significant upheaval at MTY. Chief executive officer Eric Lefebvre stepped down by mutual agreement effective immediately after a roughly eight-year tenure. Director Victor Mandel was named as his replacement. This surprise leadership change coincided with the emergence of the takeover offer.
MTY had ended a nearly year-long strategic review on Oct. 9, deciding to remain independent. Following that decision, the company announced a 35-per-cent dividend hike and increased share buybacks. MTY’s share price has fallen by roughly 15 per cent so far this year as inflation-weary consumers cut back on dining out and costs have risen, prompting the company to close underperforming locations.
The two companies offer conflicting accounts of their recent negotiations. Foodtastic stated it first communicated its proposal to MTY in writing on Oct. 15 and reiterated it on Oct. 20, claiming MTY’s board repeatedly rebuffed the offers without explanation and refused to engage in substantive talks.
MTY countered that Foodtastic had been a potential buyer for some time and received multiple extensions of its exclusivity period. According to MTY, discussions were formally ended because the latest proposals were non-binding, conditional, and not in shareholders' best interests.
Stanley Ma remains MTY's biggest shareholder with a 13.9-per-cent stake, followed by Fidelity Investments with an 11.27-per-cent position.