Towards an Imvescor purchase by Entreprise Cara?

Following a sudden 12% increase in its share price on October 27th, Imvescor Restaurant Group (TSX: IRG), owner of Mikes, Scores, Pizza Delight, Baton Rouge and Ben & Florentine, admitted having been approached by a third party for its acquisition. However, although the franchisor of 264 restaurants did not mention the name of the potential buyer, several analysts believe it could be Cara Enterprises.

Indeed, Cara would be the most natural buyer, since it currently has 1,200 restaurants under 15 banners in Canada. In addition, the two companies are geographically compatible, with Québec and the Maritimes accounting for 90% of the Imvescor network, while these same regions account for only 18% of the Cara network. This transaction is all the more likely considering that Cara has set a target of increasing its sales by one billion by 2020 to reach a total of CAN$ 3.7B. According to Sabahat Khan, an analyst at RBC Capital Markets, the bid could reach CAN$ 4.55 per share, which is 26% higher than its price before the 12% rise on October 27.

However, following the so-called non-binding offer received, three scenarios are possible for Imvescor, meaning that the company could either choose to auction, to accept an offer to purchase that would be judged right or not to sell at all. In addition, following the purchase of Ben & Florentine by Imvescor last February for CAN $ 20.5M, Frank Hennessey, CEO of Imvescor said: “we are not for sale, but in acquisition mode. I am constantly looking for opportunities to enrich our brand portfolio. ” The next weeks will tell us if this vision of the future of the company has changed or if Mr. Hennessey keeps the course.

Bibliography

Les affaires. (2018). Vers un mariage de Rôtisserie St-Hubert et Mikes? Retrieved from : http://www.lesaffaires.com/bourse/analyses-de-titres/le-proprio-de-st-hubert-reluque-t-il-mikes-et-scores/598315

La presse. (2016). Les restaurants Ben & Florentine achetés par Imvescor. Retrieved from : http://affaires.lapresse.ca/economie/commerce-de-detail/201612/20/01-5053104-les-restaurants-ben-florentine-achetes-par-imvescor.php

Financial Post. (2018). Owner of Pizza Delight, Baton Rouge restaurant chains attracts interested party. Retrieved from : http://business.financialpost.com/pmn/business-pmn/owner-of-pizza-delight-baton-rouge-restaurant-chains-attracts-interested-party

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