Foodtastic bids $43 a share for MTY; MTY replaces CEO

Foodtastic has made public a $43-a-share cash offer for MTY Food Group Inc., and the restaurant franchisor has rejected it and replaced its chief executive, the companies said Tuesday.

The Globe and Mail put the offer at about $982 million. Investing.com reported that the bid represents a 32 per cent premium to MTY’s closing share price on Oct. 30 and values the company at about $1.5 billion including debt. Bloomberg described the deal value differently, reporting a figure of about $1 billion.

MTY’s board rejected the proposal on Oct. 30, saying it was not in the company’s best interest to engage with Foodtastic about the offer. Foodtastic first sent the proposal in writing on Oct. 15 and repeated it on Oct. 20.

Foodtastic president and CEO Peter Mammas said the company was disappointed that MTY rejected the proposal without substantive dialogue.

Bloomberg, citing unnamed sources, reported that Foodtastic would finance the deal with its backers, and that financing would be lined up once a definitive agreement is signed and MTY opens its books for due diligence. Canada News Media could not independently confirm that detail.

MTY also announced a leadership change Tuesday. Director Victor E. Mandel has been appointed chief executive effective immediately. He replaces Eric Lefebvre, who is leaving the company and its board.

MTY, based in Montreal, franchises restaurant and food-service brands including Cold Stone Creamery, Wetzel’s Pretzels and Thai Express. Canada News Media previously reported that the company posted a $36.9-million profit in its first quarter, with sales down from a year earlier.

An offer made public after a board rejection is often a way for a bidder to appeal directly to shareholders. Whether shareholders will press MTY to talk with Foodtastic has not been reported, and MTY has not said whether it will respond further.

The name Foodtastic was among the top searches in Canada on Tuesday morning, according to Google Trends Canada.

The offer is unsolicited and is not a binding agreement, and there is no guarantee that a transaction will take place. Canada News Media will update this story as the companies respond.

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Sources: The Globe and Mail, BNN Bloomberg.