MTY Foods to acquire Papa Murphy's for C$253M

Canadian Pizza
April 11, 2019
By Canadian Pizza
Montreal – Papa Murphy’s has signed a $253-million Cdn definitive merger agreement with MTY Food Group, which franchises and operates quick-service and casual dining restaurants under more than 70 different brands in nearly 6,000 locations worldwide.

MTY Food Group will acquire all of the issued and outstanding shares of common stock of Papa Murphy’s for cash consideration of $6.45 US per share, representing total transaction value of approximately $253.2 million Cdn ($190 million US), including Papa Murphy’s net debt outstanding, according to a joint news release from Papa Murphy's and MTY.

The purchase price per share of Papa Murphy’s common stock implies a premium of 31.9 per cent to the Papa Murphy’s closing price on April 10, 2019, and 46.3 per cent to the unaffected Papa Murphy’s closing price on Nov. 7, 2018, prior to the announcement by Papa Murphy’s that it was conducting a process to explore and evaluate strategic alternatives to maximize shareholder value and had engaged a financial advisor to assist with the review.

As of Feb. 28, 2019, MTY's network had 5,941 locations in operation, mostly all franchised, including over 500 locations operating in 39 countries outside North America.

Papa Murphy's is a franchisor and operator of the largest Take ‘n’ Bake pizza brand and the fifth largest pizza chain in the United States, the release said. Papa Murphy’s was founded in 1981 and operated 1,331 franchised and 106 corporate-owned stores in 37 U.S. states, Canada and the United Arab Emirates as of Dec. 31, 2018.

“This is an important transaction for MTY as we add a brand with a differentiated position in pizza to our existing U.S. portfolio,” said Eric Lefebvre, chief executive officer of MTY. "We believe the pizza segment is highly attractive due to its size, fragmented nature and growth potential. The Papa Murphy's brand is well-loved by its loyal customers and is supported by a strong network of franchise partners. We expect the combination of these two companies and the expertise it brings to produce tremendous opportunities for MTY's U.S. expansion objectives."

The release said the merger is strategically timed as Papa Murphy’s system is building momentum after implementation of refreshed corporate strategy and refocus on the brand.



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