MONTREAL, Sept. 4, 2018 /CNW Telbec/ – MTY Food Group Inc. (“MTY” or the “Company”) (TSX: MTY) announced today that one of its wholly-owned subsidiaries has signed an agreement to acquire most of the assets of the sweetFrog Premium Frozen Yogurt franchise system (“sweetFrog”) (www.sweetFrog.com), for an estimated consideration of USD $35 million.
“sweetFrog is an exciting brand serving premium quality frozen yogurt and will fit perfectly within our portfolio of brands.” said Jeff Smit, COO of MTY’s U.S. operations. “We are extremely happy about everything this brand has to offer and the growth potential ahead.”
“With an executive of Jeff Smit’s caliber leading U.S. operations, MTY is the perfect organization to lead sweetFrog during its next chapter of success. I am excited to see what Smit and his team of restaurant industry experts can do as we become the largest sweetFrog multi-unit franchisee.” said Patrick Galleher, Chairman & CEO of sweetFrog Enterprises, LLC and Managing Partner of Boxwood Capital.
sweetFrog currently has 254 franchised locations and 78 corporate-owned locations. Of those 332 restaurants, 324 are located in the United States and 8 are located internationally. As part of the deal, the current 78 corporate-owned locations will transition to franchised locations under current ownership. In the last 12 months, the sweetFrog network has generated over USD $92 million in system sales.
The transaction is expected to close within 30 days of this news release but remains subject to multiple conditions customary for a transaction of this nature. There is no assurance the transaction will be completed as described above, or at all, or that the anticipated closing date will materialize.
The acquisition of sweetFrog will solidify MTY as a dominant force in the frozen treat category and represents another major milestone for MTY as it continues to expand its presence in the United States.
Following the closing of the transaction, MTY expects to consolidate operations and run the franchising platform from its U.S. headquarters in Scottsdale, Arizona under the leadership of Jeff Smit.
Financing
Total consideration for the transaction will be financed using MTY’s cash on hand and existing credit facilities.
About MTY Food Group Inc.
MTY Food Group Inc. is a Canadian public company (TSE:MTY) headquartered in Montreal, Quebec. MTY has grown to become a North American market leader in the casual, fast casual and quick service restaurant dining industry and now franchises over 70 different concepts with approximately 5,400 locations. Excellence, devotion and innovation are the key values that drive the success of MTY Group (www.mtygroup.com).
About sweetFrog Frozen Yogurt:
Founded in 2009, sweetFrog (http://www.sweetfrog.com) is one of the fastest growing self-serve frozen yogurt brands in the United States. With a wide selection of premium frozen yogurt flavors and fresh toppings choices, sweetFrog was named Best Frozen Yogurt in the USA by The Daily Meal in 2014 and 2016. sweetFrog prides itself on providing a family-friendly environment where customers can enjoy soft-serve frozen yogurt, ice cream, gelato and sorbets with the toppings of their choice.
For more information about MTY Food Group, Inc., please visit https://mtygroup.com.
For more information about sweetFrog Frozen Yogurt, please visit http://www.sweetfrog.com.
Non?IFRS Measures
This News Release makes reference to certain non?IFRS measures. These measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of the Company’s results of operations from management’s perspective. Accordingly, they should not be considered in isolation nor as a substitute for analysis of the Company’s financial information reported under IFRS. The Company uses non-IFRS measures including “System Sales” to provide investors with supplemental measures of its operating performance and thus highlight trends in its core business that may not otherwise be apparent when relying solely on IFRS financial measures. The Company also believes that securities analysts, investors and other interested parties frequently use non-IFRS measures in the evaluation of issuers. The Company’s management also uses non-IFRS measures in order to facilitate operating performance comparisons from period to period, to prepare annual operating budgets, and to determine components of management compensation.
“System Sales” represents the net sales received from restaurant guests at both corporate and franchise restaurants including take-out and delivery customer orders. System Sales includes sales from both established restaurants as well as new restaurants. Management believes System Sales provides meaningful information to investors regarding the size of MTY’s restaurant network, the total market share of the Company’s brands and the overall financial performance of its brands and restaurant owner base, which ultimately impacts MTY’s consolidated financial performance.
