Kahala Corp. (OTCMKTS:KAHL) shares surged more than 600% on Tuesday on reports that it will be acquired by Montreal-based MTY Food Group Inc.
Kahala Corp. (OTCMKTS:KAHL) operates 18 quick-service brands that have 2,900 locations in 25 countries, including Cold Stone Creamery, Blimpie and several smaller concepts, in addition to the recently acquired chains such as Planet Smoothie, Tasti D-Lite, Maui Wowi and Pinkberry. MTY Food Group Inc. ManchuWok, Big Smoke Burger, Extremepita, Madisons New York Grill & Bar, and Tosto Quickfire Pizza and Pasta, and frozen yogurt chain TCBY.
Combining these two companies would result in an entity with 5,500 units and total sales of more than $1.5 billion, as well as $190 million a year in revenue. The cash-and-stock deal is valued at $300 million for Kahala Corp. (OTCMKTS:KAHL) and MTY will operate 57 brands in the U.S. and Canada once it is completed. In addition, shareholders of Kahala will receive shares of MTY, which is publicly traded on the Toronto Stock Exchange, on top of $240 million to be divided by the number of shares.
“This is one of the most important days in the history of MTY, being able to acquire a great portfolio of brands managed by one of the very best people in the industry,” MTY CEO and chairman Stanley Ma said in a statement. “MTY had been searching for the right foundation for its U.S. expansion for the last three years, and it has finally found the perfect match.”
MTY can be able to expand its reach in the US market with this deal, leveraging the existing units of Kahala Corp. (OTCMKTS:KAHL). “My brothers and I have known Stanley Ma for many years. He is an extremely competent, and professional CEO, who successfully leads an outstanding Company,” mentioned Kahala CEO and chairman Michael Serruya in a press statement. “The merger of Kahala and MTY in my opinion is in the best interests of all Kahala’s shareholders, our outstanding employees, franchisees, suppliers, and the entire Kahala community.”
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