Canada's Cara to buy St-Hubert BBQ chain for C$537 million
By Amrutha Gayathri and Euan Rocha
(Reuters) - Canada's Cara Operations CAO.TO, owner of the Swiss Chalet casual dining chain and Harvey's burger outlets, said Thursday it would buy St-Hubert BBQ, one of Quebec's largest casual dining chains, for C$537 million ($415 million), in a bid to gain a foothold in the province.
The deal was cheered by analysts and investors. Shares in Cara, which went public a year ago, closed 9.4 percent higher at C$29.15 on the TSX.
"Given the potential synergies that exist, not only on the cost side but also on the top-line, we believe Cara has only increased its positioning as the dominant restaurant operator in Canada, and as an attractive consolidator going forward," said Canaccord analyst Derek Dley, in a note.
Cara, Canada's largest operator of full-service restaurants, had indicated it was looking to expand through acquisitions. And
analysts had flagged privately held St-Hubert as one of the most likely targets for Cara, which is controlled by dealmaker Prem Watsa's Fairfax Financial Holdings (FFH.TO: Quote).
Swiss Chalet and St-Hubert are both well known for their rotisserie chicken meals, but the two chains share little geographic overlap. More than 90 percent of St-Hubert's 117 restaurants are in Quebec, where Swiss Chalet does not have a presence.
St-Hubert also operates food manufacturing plants and other facilities in Quebec.
"There's no retail to speak of really right now in Cara, and this team and the facilities they've got in Quebec are perfect for us and Quebec was the province we were most under-penetrated within, so we can use this to build not only more St-Hubert's in Quebec, but other restaurants too," said Fairfax President Paul Rivett. Continued...