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Cara Operations acquires The Keg steakhouse chain for $161.4M

Canada’s largest full-service operator expands in CA$200M cash-stock deal

Cara Operations Ltd. has agreed to buy 106-unit Keg Restaurants Ltd. in a deal worth about CA$200 million ($161.4 million), the companies said Tuesday.

Vaughn, Ontario-based Cara, which has 1,259 restaurants, mostly in Canada, said it agreed to pay CA$105 million ($85.2 million) in cash and 3.8 million Cara voting shares for the Vancouver-based casual-dining steakhouse chain.

The Keg has 96 restaurants in Canada and 10 units in Arizona, Colorado, Texas and Washington.

The Keg restaurants generate about CA$612.1 million ($496.5 million) in annual systemwide sales, the companies said. The Keg’s same-store sales growth in the first nine months of 2017 was 4.8 percent.

Cara also said it would change its name to reflect the Keg acquisition when the deal closes in the spring.

David Aisenstat, who has been president and CEO of The Keg Steakhouse & Bar parent for the past 20 years, will stay with the company after the sale, Cara said. Aisenstat will also assume oversight of its higher-end casual brands, including The Bier Markt, The Landing and Milestones restaurants.

“This will enable Cara to introduce into these brands the key success factors experienced by The Keg,” the company said in a release. “Cara's size combined with The Keg will also provide synergistic opportunities in marketing, real estate and overall costs that will help further grow the Keg and Cara brands.”

Aisenstat will join Cara’s board of directors. Bill Gregson will remain as president and CEO of Cara and as chairman of Cara’s board. The boards of both companies have already approved the merger.

The deal also calls for Cara to pay an additional CA$30 million ($24.3 million) if The Keg restaurants achieve “certain financial milestones within the first three fiscal years” of the deal closing.

With the addition of 106 The Keg restaurants, Cara brings its total unit count to 1,365 restaurants. Cara has 55 locations outside Canada, and 82 percent of its restaurants are franchised.

Cara franchises or operates 16 brands, including Swiss Chalet, Harvey's, St‐Hubert, Montana's, Kelsey's, East Side Mario's, New York Fries, Burger's Priest, Prime Pubs, Original Joe's, State & Main, Elephant & Castle and Pickle Barrel.

Contact Ron Ruggless at [email protected]

Follow him on Twitter: @RonRuggless

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