VAUGHAN, Ont. – Fairfax Financial Holdings Ltd. proposed to privatize Recipe Unlimited Corp. in the last phase of the nearly 140-year-old restoration company.
The deal announced Tuesday by Recipe Unlimited assigns a $1.2 billion valuation to Canada’s oldest and largest full-service restaurant chain, which counts Swiss Chalet, Harvey’s and The Keg among its nearly two dozen restaurants. brands.
Fairfax is already the majority shareholder of Recipe Unlimited, holding 38.5% of the capital at the end of last year for about 61% of the voting rights.
The other major shareholder is Cara Holdings Ltd., the Phelan family’s holding company, which would continue to invest in the business once it goes private.
Recipe Unlimited first went public in 1968, then known as CARA for the first two letters of Canadian Railway, which dates back to the company’s original founding in 1883 as Canada Railway News Co. which aimed at rail travellers.
Cara Holdings Ltd. took the company private again in 2004, and in 2013 Fairfax reached an agreement to bring several restaurants, including East Side Mario’s and Casey’s, into the company’s portfolio before the company went public in 2015.
The deal announced Tuesday would see a group of Fairfax affiliates acquire all outstanding shares, except for certain shares held by Cara Holdings, for $20.73 in cash.
The offering price represents a 53.4% premium to Recipe Unlimited’s closing price on Aug. 8, according to a company statement. Recipe, however, was trading around $21 per share as recently as last November before starting to decline with the broader market, and traded above $36 per share in its first year of trading. back on the market in 2015.
The deal requires the approval of most minority shareholders and Recipe Unlimited says its board of directors intends to recommend that shareholders vote in favor of the proposed transaction at a special meeting of shareholders to be held. on this subject.
The deal comes just days after Fairfax announced it and partners also took on private UK-based Atlas Corp., which owns shipping company Seaspan and APR Energy.
Atlas’ deal calls for Fairfax and its partners to buy shares at $14.45, which represents a 32.1% premium to the 30-day average closing price on the New York Stock Exchange, but matches where the company was trading at the end of March.
Recipe shares have been under pressure during the pandemic, as it had been forced to close restaurants in many places.
The company has seen sales rebound lately as restrictions ease, reporting last week that its systems sales rose 55% to $873 million. Recipe Unlimited had 1,223 restaurants at the end of the quarter, compared to 1,330 last year.
This report from The Canadian Press was first published on August 9, 2022.
Companies in this story: (TSX:RECP, TSX:FFH)
The Canadian Press