Foodtastic Hostile Bid for MTY Food Group Values It at C$982M

A hostile bid and a friendly rescue on the same day

Two Canadian companies became takeover targets on Tuesday, and each deal is worth close to a billion dollars or more than half that. The deals look alike at first glance but are built very differently. In one, a private restaurant franchisor went straight to the shareholders of a public rival whose board had turned it down. In the other, a cannabis producer signed a board-backed merger that appears designed to block a hostile offer from the United States.

The larger and more contested deal involves MTY Food Group. Trading in its shares was halted before the open after Foodtastic Inc., a privately held franchisor based in Montreal, made an unsolicited bid for the company.11 Foodtastic owns brands including Pita Pit, Second Cup and Freshii. It is offering C$43 per share in cash for MTY, the Montreal company behind Thai Express, Van Houtte and Wetzel's Pretzels.11 The Canadian Press puts the bid at about C$982 million.16 Bloomberg's reporting rounds it to about C$1 billion and says the enterprise value is roughly C$1.5 billion once MTY's debt is included.12

On the same morning, Organigram Global agreed to buy Aurora Cannabis for C$7.80 per share. That values Aurora at about C$561 million on a fully diluted basis.7 Aurora has spent the past three months fighting off Curaleaf Holdings, and both companies' boards approved the Organigram deal unanimously.4

How Foodtastic went hostile

Foodtastic's account is that it tried the friendly route first. It says it sent MTY a written proposal on Oct. 15, repeated it on Oct. 20 and was turned down both times.11 On Tuesday it published a letter to MTY's board. The letter says MTY rejected the offer without any substantive discussion and without suggesting a way to keep talking, so Foodtastic is taking the bid directly to shareholders.14

The pricing is aggressive. Foodtastic says C$43 is a 32% premium to MTY's Oct. 30 close and a 37% premium to the 30-day volume-weighted average price up to that date.14 It also says the offer is higher than the one-year price target set by every major Canadian bank analyst.13 MTY closed at C$32.75 on Monday.16 Quartz calculated that this gave the company a market value of about C$748 million.18

The letter also makes a broader case against MTY's record. Foodtastic chief executive Peter Mammas wrote that MTY lost discipline in its operations and acquisitions over the past decade. He said the company has written down C$220 million of acquisition value since 2020, which is close to C$10 a share or nearly a third of its current market value.11 He also said that, outside the pandemic years, MTY's earnings, same-store sales and unit counts have fallen over the decade, and its shares have lost about 40% over five years.14 His proposed fix is to take the company private, on the grounds that its sprawling portfolio needs patient management that public-market pressure makes hard.11

The combined company would be large. MTY franchises or operates more than 80 brands in 40 countries with nearly 7,000 locations, about 4,100 of them in the United States.14 Foodtastic runs around 1,200 locations under banners including Freshii, Milestones and Second Cup.12

MTY's timing problem

MTY's own announcements on Tuesday made its position harder. Before the market opened, it named board member Victor Mandel chief executive, effective immediately. Eric Lefebvre left the company and stepped down from the board.11 The Globe and Mail reported that MTY gave no reason for the change.15 Mandel said he would focus on MTY's asset-light strategy, profitability and free cash flow, and called the moment a new chapter grounded in accountability.14

The bigger issue is the recent strategic review. MTY spent close to a year looking at options, including selling all or part of the business, and ended the process in October without a buyer.15 Its board and a committee of independent directors decided that sticking with the current plan would produce better returns.18 On Oct. 9, MTY announced a 35% dividend increase to 50 cents, a restart of share buybacks and a shift away from company-run restaurants toward pure franchising.12

Foodtastic's argument rests on that sequence. Three weeks after the board said no buyer could beat the standalone plan, a buyer has offered a premium that Foodtastic says exceeds every bank analyst's target. A sudden change of CEO on the morning the bid became public will not reassure investors that the standalone plan is stable. In this analyst's view, the board's main defence now is valuation, not strategy. One analyst quoted by the Globe and Mail said the offer sits just below the low end of precedent transactions.11 That suggests MTY could argue the price is too low rather than that the company should not be sold.

The shareholder register also matters. A shareholder identified as Mr. Ma held 13.9% of MTY as of April, according to S&P Capital IQ, and Fidelity Investments held 11.27%.13 With about a quarter of the shares in two holders' hands, their views will probably decide whether the hostile bid builds momentum.

Where the reporting diverges

The coverage agrees on the main terms: C$43 a share in cash and a premium of roughly a third. It differs on the details. The Canadian Press and the Globe and Mail value the bid at about C$982 million.1613 Bloomberg's rounder figure of about C$1 billion has been widely repeated, with a US-dollar equivalent of US$720 million.18 Nation's Restaurant News and other outlets use about US$700 million or US$702 million.1417 These figures differ only because of rounding and exchange rates. One summary listed MTY's share price at C$10.28 and its market value at about C$246 million.17 Those numbers do not match Monday's C$32.75 close and look like a data error.16

The financing details need a closer look. Bloomberg reported that Foodtastic and its backers would arrange financing once a definitive agreement is signed, and only if MTY lets them examine its books.12 Foodtastic calls its offer "full and certain value".11 However, an all-cash hostile bid whose financing depends on due diligence the target has not agreed to is less certain than that language implies. Foodtastic has said it wants to talk with the board, but it has also left room to pursue other routes if the directors keep refusing.18

Organigram's friendly counteroffer

The Aurora deal is a mirror image of the MTY situation. In August, Curaleaf, based in Stamford, Connecticut, launched a hostile bid for Aurora.10 It raised the offer to US$5 per share in October, made up of 0.4013 Curaleaf shares plus US$1 in cash for each Aurora share.3 Aurora's board unanimously rejected both offers, saying they significantly undervalued the company.2

Organigram's C$7.80 offer is a 93% premium to Aurora's unaffected price on Aug. 10 and a 21% premium to the implied value of Curaleaf's bid.6 Aurora shareholders can take cash, 5.8626 Organigram shares for each Aurora share, or a mix of both. Total cash is capped at C$253.6 million.1 Aurora shareholders would end up with about 35% economic ownership and 42% voting control of the combined company.7

British American Tobacco is central to the deal. Its subsidiary BT DE Investments will buy 141 million Organigram shares at C$1.33 each in a £100 million private placement to fund the cash portion. BAT, which controls 30% of Organigram's votes, has signed an irrevocable agreement to vote for the transaction and against any competing offer.4 ATB Financial is also expanding Organigram's credit facilities to as much as C$210 million.7 The companies are targeting C$50 million or more in synergies and five EU-GMP-certified facilities.6 They expect to close in January 2027.5

The market reaction was clear. Aurora rose more than 20% to its highest level since December 2025.5 Organigram fell about 5% to 8%, depending on the source and the time of day.211 Curaleaf also rose about 7%.6 One reading of that move is that investors were relieved Curaleaf may not have to pay more.

Why the two deals matter together

Taken together, the two deals show how boards handle unwanted bidders. Aurora's board ran a review, found a partner it preferred, and put together a deal with a committed shareholder, locked-in votes and financing, which gives it a firm answer to Curaleaf. MTY's board finished a similar review without a deal. It is now facing a hostile bidder at the same moment it is changing CEOs, and it has no other buyer to point to.

MTY's board now has a difficult case to make. It must convince shareholders that the new CEO and the October plan are worth more than C$43 in cash, and it must do so after a review that found no better offer. Given the analyst view that the price is at the low end of precedent deals, the most likely outcome is negotiation over price rather than a long defence. Foodtastic's original offer will probably not be its last.