Foodtastic goes hostile with C$43 bid for MTY Group
The Montreal franchisor is offering roughly C$1 billion for its larger rival, a day after MTY's board replaced its chief executive and rejected two earlier approaches.
Foodtastic has taken a hostile takeover bid for MTY Food Group public, offering C$43 a share just as its larger Montreal rival pushed out its own chief executive.
The all-cash offer values MTY at roughly C$1 billion in equity, or about C$1.5 billion including debt — a 32% premium to the company's closing share price on October 30. Foodtastic says the price exceeds what Canadian analysts expected MTY to be worth even if its own growth plans succeed.
Two rejections before going public
A hostile bid framed as concern for shareholders, delivered the same week MTY changed chief executives.
Foodtastic first approached MTY privately on October 15 and repeated the offer around October 20. Both times, MTY's board declined without opening substantive talks, according to Foodtastic. On Tuesday, after a second rebuff, Foodtastic published a letter to the board and took its case directly to MTY's shareholders instead.
MTY had run its own strategic review since last year, weighing a sale of part or all of the business. The review concluded weeks ago with a decision against selling. Instead, on October 9, MTY said it would raise its dividend 35%, to 50 Canadian cents, resume share buybacks and lean further into pure franchising rather than company-operated stores — a shift Darden is weighing for Olive Garden in the UK.
A day before Foodtastic went public with its offer, MTY replaced chief executive Eric Lefebvre with board director Victor Mandel, a former Goldman Sachs banker, effective immediately. Lefebvre also stepped down from the board. MTY called the exit mutual and gave no further explanation.
A decade of acquisitions under fire
MTY has grown since the 1980s into a franchisor of more than 80 brands — among them Cold Stone Creamery, Wetzel's Pretzels, Papa Murphy's, Pinkberry and Thai Express — across roughly 7,000 units in 40 countries, about 4,100 of them in the United States, where Wendy's largest franchisee has already closed 33 stores this year. Foodtastic, privately held, runs about 30 brands and nearly 1,200 units, including Freshii, bought in 2023 when its same-store sales were down double digits, alongside Pita Pit, Milestones and Second Cup.
Foodtastic chief executive Peter Mammas argued that MTY's acquisition-led strategy stopped paying off years ago. “Over the past decade, MTY became undisciplined in its operations and acquisitions,” he wrote, pointing to falling same-store sales, shrinking unit counts outside the pandemic years and a share price down roughly 40% over five years. “Yet this growth has failed to materialize,” he said of MTY's own turnaround plan.
Mandel, for his part, described his mandate as building “a new chapter for MTY, grounded in accountability, operational excellence” and a sharper focus on free cash flow. MTY shares jumped 14% on news of the bid. Foodtastic says it may look at other options if MTY still won't negotiate.
