Under the agreement, Cara will pay KRL shareholders, which include Fairfax Financial Holdings Ltd. and David Aisenstat, CEO of KRL, an aggregate purchase price of $200 million comprised of $105 million in cash and 3,801,123 Cara subordinate voting shares. Share price is based on Cara’s closing price of $24.93 per subordinate voting shares on the Toronto Stock Exchange on Jan. 22.
Cara also may be required to pay up to an additional $30 million of cash consideration upon the achievement of certain financial milestones within the first three fiscal years following closing. The transaction is expected to be immediately accretive to Cara’s adjusted diluted earnings per share.
Aisenstat will continue in his role as CEO of KRL in addition to oversight of Cara’s The Bier Markt, Landing Group and Milestone restaurants. He also will join the Cara board as vice chairman. Bill Gregson will remain president and CEO of Cara and chairman of the Cara board.
Cara said the merger will add 106 The Keg restaurants, expanding the company’s network to 1,365 restaurants. The Keg business generates approximately $612.1 million in annual system sales and approximately $23.5 million in normalized EBITDA.
Cara’s pro forma system sales for the 12 months ended Sept. 24, 2017, will increase to $3.4 billion and its pro forma operating EBITDA for the same period will increase to $207.9 million.
“The combination of The Keg with the 2016 St. Hubert and Original Joe’s transactions gives Cara best in class in full service, preeminence in the Quebec market with a strong retail capability and a strong Western presence along with its historical strength in Ontario,” Cara said in a statement. Cara acquired Laval, Quebec-based Groupe St. Hubert Inc. in 2016. Groupe St. Hubert Inc. is a leading full-service restaurant operator and food manufacturer.
Cara owns Swiss Chalet casual dining restaurants, Harvey’s, a chain of burger outlets and many other foodservice brands in Canada.