Montreal-based restaurant operator MTY Food Group Inc. on Wednesday announced a deal to buy U.S. brand operator Kahala Corp. in a cash-and-stock deal valued at $300 million.
The deal combines a pair of companies known for their massive collection of brands — MTY will operate 57 brands in the U.S. and Canada once the deal is complete.
“This is one of the most important days in the history of MTY, being able to acquire a great portfolio of brands managed by one of the very best people in the industry,” Stanley Ma, chairman and CEO of MTY, said in a statement. “MTY had been searching for the right foundation for its U.S. expansion for the last three years, and it has finally found the perfect match.”
Under the deal, shareholders of Kahala will receive shares of MTY, which is publicly traded on the Toronto Stock Exchange, along with $240 million in cash.
The deal is the second acquisition of Kahala by Canadian interests in less than three years. In 2013, the Serruya family, based in Toronto, acquired a controlling interest in the Scottsdale, Ariz.-based Kahala. The Serruyas had made their name in the frozen-treat segment, with the Yogen Früz chain.
In the years since, Kahala has been remarkably busy, acquiring the operator of Planet Smoothie, Tasti D-Lite, Maui Wowi and Pinkberry. It now operates 18 quick-service brands that have 2,900 locations in 25 countries, including Cold Stone Creamery, Blimpie and several smaller concepts, in addition to the recently acquired chains.
“My brothers and I have known Stanley Ma for many years,” Kahala CEO Michael Serruya said in a statement. “He is an extremely competent and professional CEO who successfully leads an outstanding company. The merger of Kahala and MTY in my opinion is in the best interests of all Kahala shareholders, our outstanding employees, franchisees, suppliers and the entire Kahala community.”
MTY considers the deal a major milestone in its efforts to build a presence in the U.S. The company operates numerous brands in a variety of formats and menu styles, including ManchuWok, Big Smoke Burger, Extremepita, Madisons New York Grill & Bar, and Tosto Quickfire Pizza and Pasta, among others. It is also the operator of the frozen yogurt chain TCBY in Canada.
The combined entity will have 5,500 units and total systemwide sales of more than $1.5 billion, as well as $190 million a year in revenue.
MTY’s U.S. headquarters will close and will move to Scottsdale after the deal is completed, which is expected within the next 75 days.
“Combining the best of both companies and the knowledge and weight of each company in their respective markets is expected to yield significant acceleration in the growth of the combined business in North America and worldwide,” Ma said.