BBQ Holdings acquired by MTY FOOD GROUP

By acquiring all issued and outstanding common shares of BBQ Holdings, Inc., MTY Food Group Inc. integrates projected twelve-month run-rate system sales of and expands its United States footprint to over 3,900 locations. Announced in August 2022, the definitive merger agreement dictates a cash consideration of US$17.25 per share to secure the existing equity and assume the outstanding net debt. The financial parameters of the buyout imply an EV/EBITDA multiple of 7.5x applied to an expected cash EBITDA of $26.5M. To finance this cross-border consolidation, MTY Food Group Inc. utilizes a combination of cash on hand and its existing credit facility without requiring external financing conditions, projecting a post-closing pro forma net debt to EBITDA ratio of approximately 2.4x. Strategically, the absorption of BBQ Holdings, Inc. significantly diversifies the buyer's concept mix, actively increasing the proportion of casual and fast-casual dining within MTY Food Group Inc.'s total pro forma system sales from 29 percent to 43 percent. Furthermore, the structural integration shifts the acquirer's revenue concentration, escalating United States-based system sales from 58 percent to 66 percent of total generated volume. The tender offer is formally executed through Grill Merger Sub, Inc., a designated subsidiary of the acquiring corporation, requiring a minimum tender threshold of at least 50 percent of fully diluted shares alongside customary antitrust clearances. To navigate this public market divestiture, the target entity mandated Kroll, LLC as its financial advisor, supported by legal counsel from Dentons Sirote PC and Lathrop GPM LLP. Conversely, MTY Food Group Inc. retained National Bank Financial Inc. as sole financial advisor, paired with Morrison & Foerster LLP for multijurisdictional legal structuring. Shareholders representing 37 percent of BBQ Holdings, Inc. executed formal support agreements prior to the anticipated fourth-quarter 2022 delisting from the NASDAQ exchange.

By taking control of Bbq Holdings, Mty Food Group continues its expansion strategy. Previously, the group had completed 2 acquisitions, including Papa Murphy'S in 2019.