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.
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.”
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.