Foodtastic Goes Hostile With $700M Bid for MTY as CEO Exits

Montreal-based Foodtastic Inc. on Tuesday launched a roughly $700 million (U.S.) bid to buy fellow Canadian multi-brand franchisor MTY Food Group, offering $43 per share in Canadian dollars after MTY's board rejected two earlier approaches.

The hostile turn came with sharp timing. On the same day, MTY announced it had ousted CEO Eric Lefebvre, effective immediately, replacing him with board member Victor Mandel, a former Goldman Sachs investment research vice president. MTY did not immediately respond to requests for comment on the offer.

Foodtastic first communicated its offer on Oct. 15 and reiterated it five days later, only to be, in its words, "repeatedly rebuffed." So it's taking the bid straight to MTY shareholders and published a letter to the board expressing disappointment that the offer was dismissed "without reason or suggestions for a pathway to continued engagement."

What does the offer value MTY at?

The $43 Canadian per-share price is a 32% premium to MTY's closing price on Oct. 30, and a 37% premium to the 30-day volume-weighted average price ending that date. Foodtastic says the price beats the target that Canadian analysts calculated — targets that assumed MTY would grow.

"Yet this growth has failed to materialize," wrote Foodtastic President and CEO Peter Mammas in the letter.

Mammas laid out the operating case against MTY: earnings, same-store sales and unit counts have declined over the last decade, aside from the COVID years, and the stock has dropped roughly 40% over five years. For a franchisor, shrinking unit counts and negative same-store sales hit the royalty base directly — the revenue engine of an asset-light model.

"We believe MTY owns many wonderful brands and has many terrific franchisee partners," Mammas wrote. "However, over the past decade, MTY became undisciplined in its operations and acquisitions."

He argued MTY has acquired too many concepts, "some good and some bad," without generating organic growth in the aggregate. Foodtastic's prescription: "patient, long-term focus, which is very difficult to do under the short-term pressure of public markets."

Who are the two players?

MTY, also headquartered in Montreal, franchises and operates more than 80 brands across 40 countries with nearly 7,000 units — about 4,100 of them in the U.S. Its portfolio includes Wetzel's Pretzels, Papa Murphy's, Pinkberry, Planet Smoothie and Cold Stone Creamery.

Foodtastic runs a smaller but still cross-border operation: 30 brands and nearly 1,200 units, including Freshii, Pita Pit, Dunkin' locations in Canada, and Milestones.

A combined entity would control roughly 8,000 units, though the deal's logic rests less on scale than on portfolio pruning and private-market discipline.

Why the CEO change matters

MTY had already been signaling upheaval. It initiated a strategic review last year to explore options including a full or partial sale, and in October, Lefebvre said the company might offload some of its weaker-performing brands.

Now Mandel inherits both the review and the bid. His stated focus: "executing our asset-light value creation strategies to drive profitability, pursue growth opportunities and generate strong free cash flow."

"This is an opportunity to establish a new chapter for MTY, grounded in accountability, operational excellence and a clear commitment to delivering value for our shareholders," Mandel said in a statement. "I look forward to sharing our roadmap with shareholders."

With the offer now in shareholders' hands, the next move belongs to them — and to whether Mandel's roadmap can justify staying independent against a 32% premium.