Burlington, Ontario-based Afton Food Group and the Pizza Delight Corp have entered into an agreement to merge, pursuant to which Pizza Delight shareholders will be issued approximately 28.5 million Afton shares.
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The merger will result in the current shareholders of Moncton, New Brunswick-based Pizza Delight becoming the controlling shareholders of Afton holding approximately 63% of the fully diluted shares which is equivalent to 72.5% of the basic, issued and outstanding shares, at closing. Bernard Imbeault, CEO of Pizza Delight, will serve as the CEO and president of the merged companies following closing.
Afton’s board of directors unanimously endorsed the merger with Pizza Delight after receiving an opinion from PricewaterhouseCoopers LLP that the proposed transaction is fair to its shareholders from a financial point of view. Major Afton shareholders have signed agreements committing them to support the deal.
The combined companies will operate and have under development more than 700 franchised and corporate outlets, generating an estimated C$400m (US$255.6m) in system sales, almost C$60m in revenue and approximately C$15m in EBITDA on an annualised basis. Directly, and indirectly through its franchisees, it will employ about 12,000 people directly and have operations in all provinces of Canada.
Imbeault and Afton’s CEO, Robert Macdonald, said in a joint statement: “The merger will result in the formation of a national franchise powerhouse with strong brands, a strong management team, similar corporate cultures, and a common vision and desire to grow system sales through internal development of its’ brands, as well as future acquisitions.
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By GlobalData“This combination provides the critical mass and a national platform to pursue the objective of creating further shareholder value, including the possibility of examining the reorganisation and recapitalisation of the company into an income trust.”
Completion of the merger is subject to Afton obtaining regulatory and shareholder approvals. It is anticipated that a meeting of Afton shareholders will be held in June 2002 to approve the transaction.
Rights offering
The board of directors has also authorised Afton proceeding with a rights offering pursuant to which it will raise gross proceeds of up to C$1.5m, depending upon market conditions and its own share price performance.
This offering will not be conditional upon the proposed merger with Pizza Delight being completed and Afton intends to use the funds raised for general working capital purposes.
