Papa Murphy's Gains 30% After Agreeing To Sell Itself To MTY Food Group In $190M Deal

Papa Murphy's Holdings Inc FRSH, a maker of fresh pizzas for customers to buy and bake in their own homes, reached an agreement to sell itself to MTY Food Group Inc MTYFF, a Canada-based operator of quick-service and casual dining restaurants.

What Happened

As part of the merger agreement, MTY will buy all outstanding shares of Papa Murphy's stock for $6.45 per share, which represents a premium of more than 30 percent from Wednesday's closing price. MTY said in a press release the deal will strengthen its portfolio of brands as well as increase and complement its exposure to the U.S. food market.

The deal is valued around $190 million.

Related Link: JPMorgan Now Prefers Domino's Over Taco Bell

Why It's Important

The pizza market is "highly attractive" given the large size, fragmented nature, and growth potential, MTY CEO Eric Lefebvre commented in the press release. The Papa Murphy's brand is backed by a "strong network of franchise partners" and the merger is expected to "produce tremendous opportunities" for MTY's US expansion goals.

What's Next

Once the merger is finalized, MTY will boast more than seven thousand locations globally with more runway ahead. MTY said it remains committed to following its acquisition strategy and it should generate sufficient cash flow to pursue future M&A opportunities and allows for deleveraging.

The transaction is expected to close in the second quarter and MTY has the right to match any superior proposal Papa Murphy's may receive.

Papa Murphy's stock traded around $6.41 per share Thursday morning, up 31.1 percent.