VAUGHAN, Ont. – Cara Operations Ltd. says it has signed a deal to acquire a majority stake in Original Joe’s Franchise Group Inc., for $93 million.
The bulk of that amount, $90 million, will be used by Original Joe’s to re-acquire its trademarks and royalty rights from Diversified Royalty Corp..
This will allow Original Joe’s to retain about $12.6 million in annual royalty payments now paid to Diversified Royalty.
Original Joe’s franchises and operates 99 restaurants in Canada and the U.S. under three banners – Original Joe’s Restaurant & Bar, State & Main Kitchen Bar and Elephant & Castle Pub and Restaurant. Together, they generate about $250 million in sales.
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Cara Operations says with the acquisition of Original Joe’s and its pending acquisition of the Quebec-based St-Hubert chain of restaurants, its total system sales will reach about $2.7 billion.
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Cara also says it will have 1,219 restaurants under its name once it adds 117 from the St-Hubert acquisition and 99 from Original Joe’s.
“Original Joe’s is a natural fit for Cara. The majority of Original Joe’s restaurants are located in Western Canada, an area where Cara is currently under-represented,” said Cara’s CEO Bill Gregson in a release.
“With our acquisition of Quebec-based St-Hubert, soon to close, Cara’s business and restaurant network will now have greater geographic distribution across all of Canada.”
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Original Joe’s president and CEO Derek Doke says while the decision to unwind the royalty relationship with Diversified was difficult, “the opportunity to partner with Cara was attractive from a strategic and synergistic perspective.”
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“The Original Joe’s head office will continue to be located in Calgary and existing management will remain in charge of Original Joe’s business.” Doke added.
The transaction, with a targeted closing date of late 2016, is subject to customary relevant approvals.
Founded in 1883, Cara franchises and/or operates restaurant brands that include Swiss Chalet, Harvey’s, Kelsey’s, East Side Mario’s, Montana’s, Milestones, Prime Pubs, Bier Markt, New York Fries and Landing restaurants.
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