Deal will expand Cara’s retail footprint by 19%
The food services company behind Swiss Chalet and Harvey’s is expanding with a deal to buy Prime Restaurants Inc. for nearly $59 million.
Cara Operations announced late Monday it’s buying Prime Restaurants, which franchises, owns and operates East Side Mario’s, Casey’s, D’Arcy McGee’s and other chains.
Cara president and chief executive Don Robinson said the deal gives the privately held company a much desired Italian food brand in East Side Mario’s and an entry into the pub market.
“Cara has long wanted to have a foot in the Italian dining segment which we don’t have now and we’ve also long wanted to have a foot in the pub business which we don’t have now,” he said in an interview Monday.
“In this current economic climate where value is so important, East Side Mario’s is in a sweet spot as a brand. It is affordable dining for families and that’s what Canadians look for.”
Robinson also said Prime’s Irish pub brands, which in addition to D’Arcy McGee’s includes Fionn MacCool’s, Paddy Flaherty’s and Tir nan Og, complement its other holdings.
“They’re smaller in size, so you’re able to penetrate more easily the urban landscape, which with our other brands is more difficult,” he said.
The deal between the two Toronto-area companies will see Cara grow to roughly 830 restaurants and pubs from about 700 locations.
“Becoming part of the Cara family will create new opportunities to grow our brands,” said Prime chief executive John Rothschild.
Steven Sharpe, chairman of Prime’s special board committee, said the transaction “delivers a significant premium and an excellent liquidity opportunity to our shareholders.”
“Furthermore, Cara Operations Limited will strengthen the company’s future growth prospects and provide new business opportunities to the benefit of both our franchisees and our employees.”
Cara said it expects to close the acquisition Jan. 4, 2012.
Cara, which includes the Milestones Grill & Bar, Montana’s Cookhouse and Kelsey’s Neighbourhood Bar & Grill, employs 26,000 people and was taken private in 2004.
The deal Monday follows a series of divestitures by Cara that included the sale of the company’s airline food services business and other non-core businesses.
When the Prime transaction closes, Cara said it will be the third-largest restaurant operator in Canada by sales and employ more than 37,000 people.
