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Aug 9, 2022

Fairfax proposes taking over restaurant group at 53% premium

Restaurants are seeing growth in sales, but still below 2019 levels: Analyst


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Investment group Fairfax Financial Holdings Ltd. has pitched a take-private deal for Recipe Unlimited Corp. that values the Canadian restaurant owner at about $1.2 billion (US$933 million). 

Toronto-based Fairfax would pay $20.73 a share in cash for the company, which owns fast-casual and fast-food brands such as East Side Mario’s, Kelseys and Swiss Chalet. The price is a 53 per cent premium to Monday’s close, Recipe Unlimited said in a statement.

Recipe said its board intends to recommend that shareholders vote in favor of the deal, based in part on a valuation provided by Greenhill & Co. that placed the fair value of the shares between $16.67 and $21.85. The deal requires the approval of the majority of minority shareholders. 

Fairfax already owns about 23 per cent of the subordinate voting shares of Recipe, according to data compiled by Bloomberg. Cara Holdings Ltd. would remain an investor in the company, according to the statement. 

It’s the second time in a week that Fairfax, a $18 billion holding company controlled by Prem Watsa, has sought to take private a significant publicly-traded investment. Last week, the firm joined with former Berkshire Hathaway executive David Sokol and others in a takeover bid for Atlas Corp., the parent company of container ship operator Seaspan. 

Another Canadian fast food provider, MTY Food Group Inc., also announced a deal on Tuesday, offering to buy U.S. restaurant owner BBQ Holdings Inc. for US$200 million. MTY rose 1.2 per cent to a$59.05.