The Montreal fast food company MTY is buying the American chain Wetzel’s Pretzels for a cash sum of 207 million US dollars, or the equivalent of 284 million in Canadian dollars.
Wetzel’s Pretzels is a franchiser and direct operator of fast food pastry counters with more than 350 locations in 25 US states, as well as Canada and Panama.
Over the past 12 months, the Wetzel’s Pretzels network, which is 90% franchised, has achieved total sales of approximately US$245 million.
This transaction represents “another key acquisition that allows us to add another iconic brand to our portfolio of brands in the United States,” said MTY CEO Eric Lefebvre.
According to Mr. Lefebvre, the acquisition of Wetzel’s Pretzels aims to “increase MTY’s presence in the snack market, which is not very seasonally exposed, with tempting products that are recognized across the United States”.
Also, MTY touts the acquisition of a company with “a seasoned management team with a solid track record of operations”.
With the addition of the Wetzel’s Pretzels network, MTY’s presence in the United States will pass the threshold of 4,200 establishments among its many fast food brands.
Also, the American activities of MTY will account for approximately 70% of the total turnover of its entire network of brands and affiliated businesses.
In its most recent financial results, announced in early October, MTY recorded network sales of C$1.1 billion during its third quarter ended August 30, and C$3.04 billion cumulatively since the start of its fiscal year 2022. These two amounts are up 8% and 14% on an annualized basis, respectively.
As for MTY’s direct revenues, as franchisor and main supplier, they reached CAN 171.5 million in the third quarter, up 13% year-on-year, and CAN 474.5 million year-to-date, up 17% year-on-year.
MTY’s cumulative net profit after three quarters in 2022 is C$67.7 million, up 11% from the comparable period a year earlier.
On the stock market, on Wednesday, investors in MTY shares reacted favorably to the announcement of this second acquisition of more than 200 million made in three months in the United States.
Last August, MTY paid 200 million US (or 257 million CAN) for the acquisition of the American company BBQ Holdings, which manages a network of 300 restaurants under four main brands in the United States, Canada and the Arab Emirates United.
At the end of the session, in Toronto, the market value of MTY was trading up 6%, at $57.89 per share. This value is midway between the high of $65 and the low of $45 per share reached over the past 12 months.
Headquartered in Montreal, MTY is a franchisor that operates fast-food outlets and full-service restaurants under some 90 brands in Canada, the United States and abroad.
In Quebec alone, MTY’s fast-food network includes the Café Dépôt and Van Houtte brands, as well as Cultures, La Crémière, mmmuffins, Sushi Shop, Thai Express and Valentine.
In the full-service restaurant market, MTY owns the Giorgio, Baton Rouge and Scores brands, as well as Casa Grecque, Ben & Florentine and Tutti Frutti.