MONTREAL – MTY Food Group Inc. (TSX:MTY) plans to buy the group of companies that operate the Extreme Pita, PurBlendz and Mucho Burrito restaurant chains in a $45-million deal that will give it a foothold in the U.S. market.
Chief executive Stanley Ma said Tuesday the deal provided the Montreal-based restaurant franchisor its first stores south of the border, paving the way for MTY’s entry into the U.S.
“We are very excited to have the opportunity to acquire two brands that enjoy such strong brand equity and that have a significant growth potential in Canada and outside of our borders,” Ma said in announcing the deal.
“This will complement MTY’s current portfolio not only in terms of offering to its customers, but also in terms of geographical location; the 40 stores in the United States will be MTY’s first stores on American territory. The ice is now broken.”
Shares in the company were up more than seven per cent on the Toronto Stock Exchange after the deal was announced, trading at $24.37 per share.
MTY currently has more than two dozen brands that include Thai Express, Vanellis and Sushi Shop.
When the latest deal closes, Extreme Brandz is expected to have more than 235 Extreme Pita and 70 Mucho Burrito restaurants operating in Canada and in the United States. Two locations for each brand are corporate-owned.
PurBlendz is an add-on to the Extreme Pita restaurants and is expected to be in about 70 locations by closing.
The deal is MTY’s biggest acquisition to date and will be paid for in a mix of cash and credit.
System-wide sales for Extreme Brandz’ most recent completed fiscal period were more than $103 million. The company has Canadian offices in Toronto and Calgary, as well as in Scottsdale near Phoenix, Ariz.
Extreme Brandz employees in Toronto will be relocated to MTY’s existing office in Richmond Hill, north of that city, while the Calgary and Scottsdale offices are expected to remain as they are.
Sean Black, co-founder of Extreme Brandz, will remain with the company as chief development officer.
“This is an exciting time for MTY and I am honoured to have the opportunity to join the team and help develop the incredible potential of the company,” Black said.
“I believe this strategic acquisition by MTY will be very good for the Extreme Brandz franchisees as well as the MTY shareholders.”
Last month, MTY inked a deal for the SushiGo chain of fast food restaurants for $1.05 million in cash.
Some of its other more than 2,220 quick service restaurants also include banners such as Yogen Fruz, Country Style, Mr. Sub and Au Vieux Duluth Express.