MONTREAL MTY Food Group Inc., known for popular restaurant brands such as Thai Express, Cold Stone Creamery, and Mucho Burrito, is considering a potential sale along with other strategic options aimed at enhancing investor returns. The Montreal-based fast-food franchisor announced on Monday that its board has initiated a strategic review and engaged a financial adviser to identify and evaluate various alternatives to boost shareholder value.
MTY's statement highlighted that the company is exploring a range of options, which may include the sale of part or all of the company, while also continuing with its current business strategy. However, MTY stressed that there is no guarantee that any transaction will occur.
This announcement followed a report from Reuters indicating that MTY Food Group had retained TD Bank to assist in exploring a potential sale. The company boasts over 80 brands and more than 7,000 locations worldwide.
On the day of the announcement, MTY's shares surged by $4.54, or 13.5 percent, closing at $38.27, which brought the company's market capitalization to approximately $874 million. Despite this positive movement, MTY's financial performance showed signs of distress; the company reported a 20 percent decline in net income attributable to shareholders, which amounted to $27.9 million in its most recent quarter.
The fast-food sector as a whole has faced significant challenges this year, including rising prices, increasing competition, and broader economic volatility, which has contributed to pressure on MTY's share price. During a quarterly conference call with analysts last month, CEO Eric Lefebvre noted that MTY is actively seeking acquisitions but has yet to find any appealing offers. He expressed optimism about future opportunities, stating, "It’s just a matter of us to be at the table for those right deals when they come in and to be able to make them cross the finish line."
Growth remains a priority for MTY, particularly as economic conditions continue to fluctuate due to factors such as global trade tensions and heightened competition within the fast-food industry. There have been indications that other players in Canada's restaurant market are also pursuing acquisition opportunities. For instance, Peter Mammas, CEO of Foodtastic Inc., mentioned in July that his company is actively looking to acquire established brands across North America specializing in various cuisines, including breakfast, quick-service, pizza, and Mediterranean fare. Foodtastic, which also operates from Montreal, maintains a portfolio of 1,200 locations under its 27 different chains, including Second Cup and Milestones.
Overall, MTY Food Group Inc. is in a crucial phase as it evaluates its strategic options in response to both internal financial pressures and a challenging external market landscape. The outcome of this strategic review could shape the company's trajectory as it strives to enhance shareholder value while navigating the complexities of the fast-food industry.
