Foodtastic hostile bid for MTY Food Group nears $1B after rebuff

A public fight between two Montreal franchisors

Canada's restaurant franchising industry rarely sees a public takeover fight, but it has one now. Foodtastic Inc., the privately held operator behind Freshii, Milestones, Pita Pit and Second Cup, has gone public with a cash proposal of C$43 per share for MTY Food Group Inc. MTY owns Thai Express, Manchu Wok, Cold Stone Creamery and Wetzel's Pretzels. Foodtastic took the offer directly to shareholders after MTY's board refused to engage with it.19 On an equity basis the proposal is worth roughly C$1 billion, and about C$1.5 billion once debt is included. The price is a 32 per cent premium to MTY's closing price on Oct. 30.13

The timing made it more dramatic. A few minutes before the bid became public on Nov. 3, MTY said chief executive Eric Lefebvre was leaving by mutual agreement after about eight years in the job. Board member Victor Mandel replaced him effective immediately, and the company gave no reason for the change.18 MTY then said late that day that its board had unanimously rejected Foodtastic's October proposals and formally ended discussions.17

The numbers, and why reports differ

The size of the deal depends on who is describing it. Canadian Press and the Globe and Mail put the equity value at about C$982 million. Bloomberg-derived coverage rounded it to C$1 billion.236 U.S. trade publications converted the figure at different exchange rates: Nation's Restaurant News used about US$702 million, QSR Magazine about US$704 million and Restaurant Dive about US$720 million.4713 These figures all describe the same offer of C$43 per share. Headlines calling it a "billion-dollar" deal mean the equity value rounded up, or the larger enterprise value that includes debt.

Reports of the market reaction also differ slightly. The Globe reported that MTY shares closed up 11 per cent at C$36.35 on Tuesday, while one data aggregator put the jump at 14 per cent.5 The more important point is that the stock settled well below C$43. In the Globe's later market table it traded around C$37.5 That gap suggests investors see a real chance the deal never closes. Some of the same aggregator coverage gave market-cap and share-price figures that cannot be squared with an offer near C$1 billion, so those numbers should be treated cautiously.10

Foodtastic says C$43 is a 37 per cent premium to MTY's 30-day volume-weighted average price. It also says the price beats the one-year targets published by TD Cowen, Raymond James, Scotiabank, National Bank and RBC.414

Hostile bid or pressure campaign

Much of the coverage calls this a "hostile takeover bid," and in spirit it is. Foodtastic went around a board that had said no.69 Legally, though, it is something less. MTY itself describes the offer as non-binding and conditional.17 Foodtastic says it would structure the deal as a statutory plan of arrangement under the Canada Business Corporations Act, with financing committed only when definitive agreements are signed and after confirmatory due diligence.14 A plan of arrangement needs the target board's cooperation.

One explanation for the format comes from Canada's takeover rules, in place since 2016. An offer made directly to shareholders has to stay open for at least 105 days unless the target's board shortens that period. It also cannot close unless more than half of the shares not held by the bidder are tendered. A public letter is quicker and cheaper. It uses shareholder pressure to try to get Foodtastic into the boardroom without committing to a formal tender offer. Foodtastic has said directly that it wants a friendly deal and published the offer so shareholders could judge it themselves.1 It has also asked MTY investors to tell the board what they think.7

Two accounts of the talks

The sharpest disagreement is about what happened before the offer became public. Foodtastic says it first put the proposal in writing on Oct. 15 and repeated it on Oct. 20. It says MTY rejected it both times without explanation or any path to further talks.114

MTY says Foodtastic had been involved for much longer. In MTY's telling, Foodtastic took part in the strategic review MTY launched in November 2025 and received several extensions of an exclusivity period to secure financing and close a deal.1117 That review ended on Oct. 9 without a sale. Instead MTY raised its dividend 35 per cent to 50 cents, restarted share buybacks and committed to a more fully franchised, asset-light model.3

Foodtastic disputes the financing point. It says the extensions were mainly used for due diligence on MTY's finances, operations and legal matters, and that talks collapsed because MTY had "unrealistic expectations" about its value.713 Both accounts can be partly true. Price and financing are usually tied together in leveraged take-private deals. Still, MTY's emphasis on financing is a deliberate attempt to raise doubts about whether Foodtastic can pay.

At least one analyst has noticed. Acumen Capital's Nick Corcoran wrote that MTY's statement raises questions about financing certainty if Foodtastic goes straight to shareholders. He added that Foodtastic believes it can secure funding through its relationship with Oaktree.5 Foodtastic, for its part, has said it would not ask MTY shareholders to vote on a deal unless sufficient financing was in place.13

Foodtastic's case against MTY

Foodtastic's public letter strongly criticizes how MTY has been run. Peter Mammas, Foodtastic's chief executive, argues that MTY bought too many concepts of mixed quality and is not producing organic growth overall. He cites about C$220 million in acquisition-related writedowns since 2020.7 He also points to total shareholder returns of minus 12 per cent this year, minus 32 per cent over three years and minus 40 per cent over five years. Over the same periods, the S&P 600 Restaurants index posted strong gains.

MTY's own results back up parts of this argument. In its latest quarter, systemwide sales were flat at about C$1.5 billion. Same-store sales fell 1.9 per cent overall, including 2.7 per cent in the U.S. and 9.1 per cent internationally. Normalized adjusted EBITDA dropped to C$60.8 million from about C$74 million.11 By MTY's own account, the business is shrinking at the operating level.

On Wednesday Foodtastic also criticized the new CEO. It questioned Mandel's restaurant experience and said MTY's total shareholder return during his time on the board was about minus 37 per cent.713 Mandel is a former Goldman Sachs investment research executive. He has described his appointment as a new chapter built on accountability and an asset-light strategy, and has promised to share a roadmap with shareholders.4

Is C$43 enough

This is where the outcome will most likely be decided. RBC's Ryland Conrad called Foodtastic "a logical acquirer" in a thin pool of possible buyers and said a sale still makes sense for shareholders.1 Corcoran was cooler on the price. Based on recent North American restaurant deals, he estimated a possible transaction value of C$44 to C$65 per share on fiscal 2026 EBITDA. He noted that Foodtastic's offer falls just below the low end of those precedents.5

That range explains how both sides can claim to be acting for shareholders. Foodtastic says its offer beats every bank's price target and gives certain cash today, compared with what it calls an uncertain turnaround.1 MTY's board can say that comparable deals point to a higher price and that its new capital-return program has not had time to work.

There are also questions about the brands. David Pullara, a marketing instructor at York University's Schulich School of Business, argued that MTY's portfolio is mostly convenience stops rather than destination brands, and that Foodtastic has done better at building brands people seek out.8 That view is not unanimous. Nation's Restaurant News pointed out that Foodtastic took over Freshii in 2023 while Freshii's same-store sales were falling by double digits.4

What comes next

The most likely outcome is negotiation, not a contested tender. MTY has replaced its CEO, ended talks and committed to a standalone plan.17 Foodtastic says it can sign a deal quickly and is ready to meet immediately.7 With the stock stuck in the high C$30s, the market seems to expect either a modestly higher bid with firm financing or a long standoff. A formal hostile tender would be expensive and slow under the 105-day rule, and Foodtastic has not yet shown committed financing. Unless one side moves on price, MTY's long-term shareholders will be the ones to decide whether C$43 in cash is better than the new CEO's promised turnaround.