MTY Food Group Inc. (TSX:MTY) said Tuesday it has agreed to pay $45 million to buy the group of companies that operate the Extreme Pita, PurBlendz and Mucho Burrito restaurant chains.
Chief executive Stanley Ma says the deal will pave the way for MTY's entry into the U.S. market, with 40 newly acquired stores in that country.
The Montreal-based restaurant franchisor currently has more than two dozen brands that include Thai Express, Vanellis and Sushi Shop.
When the latest deal closes, Extreme Brandz is expected to have more than 235 Extreme Pita and 70 Mucho Burrito restaurants operating in Canada and in the United States. Two locations for each brand are corporate-owned.
PurBlendz is an add-on to the Extreme Pita restaurants and is expected to be in about 70 locations by closing.
The deal is MTY's biggest acquisition to date and will be paid for in a mix of cash and credit.
It says system-wide sales for Extreme Brandz' most recent completed fiscal period were more than $103. million. The company has Canadian offices in Toronto and Calgary, as well as in Scottsdale near Phoenix, Ariz.
Extreme Brandz employees in Toronto will be relocated to MTY's existing office in Richmond Hill, north of that city, while the Calgary and Scottsdale offices are expected to remain as they are.
Sean Black, co-founder of Extreme Brandz, will remain with the company as chief development officer.
"We are very excited to have the opportunity to acquire two brands that enjoy such strong brand equity and that have a significant growth potential in Canada and outside of our borders," Ma said in announcing the deal.
"This will complement MTY's current portfolio not only in terms of offering to its customers, but also in terms of geographical location; the 40 stores in the United States will be MTY's first stores on American territory. The ice is now broken."