Canada-based restaurant group Foodtastic publicly revealed that it proposed a roughly $704.2 million take over of fellow Canadian restaurant franchisor MTY Food Group. The two sides are now clashing over how negotiations have been handled.
The disagreement escalated Wednesday when Foodtastic accused MTY of making misleading statements. The response came one day after MTY defended its decision to reject the proposal and announced a change in its chief executive position.
Foodtastic first submitted its written proposal on October 15 and reiterated the offer on October 20. The company made its bid public Tuesday, arguing that MTY’s board had repeatedly declined to engage in substantive discussions.
The proposed purchase price, $43 per share, represents a 32 percent premium to MTY’s October 30 closing share price and a 37 percent premium to its 30-day volume-weighted average price, according to Foodtastic.
Foodtastic president and CEO Peter Mammas said the company sees significant opportunities in MTY’s restaurant portfolio, despite concerns regarding its recent performance.
“I have long had tremendous respect for [MTY founder] Stanley Ma and the organization he built. MTY is a great company with excellent opportunities, but it has unfortunately not lived up to its full potential in recent years,” Mammas said in a statement. “We are very excited about the Proposed Transaction and believe it would not only deliver full and certain value to MTY’s shareholders, but also would be an incredible combination for its franchisees and employees.”
Foodtastic operates approximately 1,200 restaurants across 30 brands, including Pita Pit, Freshii, Quesada, Second Cup, and Milestones.
MTY is considerably larger, with 6,966 restaurants across more than 80 concepts in the U.S., Canada, and international markets. Its portfolio includes Cold Stone Creamery, Papa Murphy’s, Wetzel’s Pretzels, and Baja Fresh. Approximately 57 percent of MTY’s restaurants are in the U.S., 35 percent are in Canada, and 8 percent operate internationally.
A combination would bring together two Canadian restaurant franchisors with extensive portfolios and experience acquiring established brands.
However, the companies disagree over whether a sale represents the best outcome for MTY shareholders.
MTY said Tuesday that its board unanimously rejected Foodtastic’s October proposals after reviewing them and determining that pursuing a transaction was not in the company’s or shareholders’ best interests.
The company also disputed Foodtastic’s characterization of the negotiations, pointing to an extended strategic review that began in November 2025.
MTY said its independent special committee considered a range of alternatives, including selling the entire company, divesting individual businesses, and continuing its existing strategy.
During that process, Foodtastic received multiple extensions of an exclusivity period that MTY said were intended to allow the potential buyer to secure financing and complete a transaction.
Following the review, MTY announced October 9 that it would pursue its own strategic plan instead of a sale.
Foodtastic challenged that explanation Wednesday.
“Foodtastic was not able to come to an agreement with MTY during the strategic review process, or subsequently, because [MTY] had unrealistic expectations about its value,” Foodtastic said in a statement.
Foodtastic disputed MTY’s claim that it needed additional time to secure financing for the acquisition. Foodtastic claimed the extensions were primarily used to review MTY’s finances, operations, and legal matters before agreeing on a purchase price.
The group also said it plans to fund the acquisition through its own resources and financial partners. The company expects to have financing commitments in place when a final agreement is signed, assuming the remaining reviews are completed. However, Foodtastic’s $43-per-share proposal is not a binding offer, and the two companies have not reached an agreement.
Foodtastic’s public campaign also focuses on MTY’s recent financial performance.
In its Tuesday letter to MTY’s board, Foodtastic argued that the company’s EBITDA has declined consistently and that its acquisition strategy has failed to produce sufficient organic growth.
The potential buyer pointed to approximately $220 million in acquisition-related write-downs since 2020, arguing that MTY acquired too many concepts without consistently improving their performance.
Foodtastic also cited MTY’s stock performance. According to its calculations, MTY’s total shareholder return was negative 12 percent year to date through October 30, negative 32 percent over three years, and negative 40 percent over five years.
Those figures compared with positive returns of 45 percent, 81 percent, and 39 percent, respectively, for the S&P 600 Restaurant Index over the same periods.
MTY’s latest quarterly results provide additional context for the disagreement.
The company reported approximately $1.5 billion in systemwide sales during its third quarter, essentially unchanged from the previous year.
Same-store sales declined 1.9 percent across its restaurant portfolio, including a 2.7 percent decrease in the U.S. and a 9.1 percent decline internationally. Canadian same-store sales slipped 0.2 percent.
Revenue decreased 7.1 percent to $277.7 million, primarily because of fewer company-operated restaurants and lower retail segment revenue.
Net income fell to $24.8 million from $27.9 million a year earlier.
Normalized adjusted EBITDA declined to $60.8 million from approximately $74 million, with MTY attributing the decrease primarily to weaker profitability at company-operated restaurants, particularly in the U.S. and international markets.
The company’s franchise business performed better. Franchise segment revenue increased 1.6 percent, and normalized adjusted EBITDA grew 1 percent to $55.4 million, with margins holding steady at 54 percent.
MTY has been reducing its exposure to company-operated restaurants as part of a plan to focus more on franchising.
The company closed 50 corporate restaurants during the third quarter as part of a previously announced initiative to eliminate underperforming locations. It expects to complete the remaining closures during the fourth quarter.
MTY finished the quarter with 184 company-operated restaurants, representing 2.6 percent of its system, compared with 3.6 percent a year earlier.
Altogether, the company recorded 74 net restaurant closures during the quarter, opening 72 locations and closing 146.
MTY’s board believes additional operational changes can improve profitability and create shareholder value without selling the business.
Its strategy includes simplifying the restaurant portfolio, reducing corporate expenses, returning capital to shareholders, and continuing its transition toward an asset-light franchise model.
The disagreement over MTY’s future coincided with a significant change at the top of the organization.
On Tuesday, MTY appointed board member Victor Mandel as CEO, effective immediately, replacing Eric Lefebvre.
Lefebvre also departed the company’s board.
Mandel previously served as chairman, CFO, and director of various public companies and worked in investment research at Goldman Sachs. He holds an MBA in finance from the Wharton School and an undergraduate computer science degree from Harvard University.
Ma said Mandel’s familiarity with the business and experience in the U.S. market position him to execute the company’s strategic priorities.
Mandel said the company will focus on improving profitability, identifying growth opportunities, and producing free cash flow.
“Our focus is on executing our asset-light value creation strategies to drive profitability, pursue growth opportunities and generate strong free cash flow,” Mandel said in a statement. “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.”
Foodtastic criticized the appointment Wednesday, questioning Mandel’s restaurant industry experience and pointing to MTY’s stock performance during his tenure on the board.
The company argued that shareholders should have the opportunity to consider its cash proposal instead of relying exclusively on MTY’s turnaround strategy.
Foodtastic said it is prepared to resume discussions immediately and believes an agreement could be negotiated and signed in a short period.
MTY, however, has formally terminated discussions regarding the October proposals and has not indicated that it plans to reconsider the offer.
The dispute leaves shareholders weighing a proposed cash premium against MTY’s plan to improve operating performance independently. Any acquisition would require the companies to negotiate definitive terms, secure financing commitments, and satisfy applicable approvals.
Foodtastic has made clear that it does not consider MTY’s rejection the end of the matter.
“We think our Proposed Transaction is a better option for shareholders on an absolute and risk-adjusted basis,” the company said Wednesday. “We call on MTY’s shareholders to voice their perspectives about our Proposed Transaction to the Board and stand ready to engage with the Company as soon as possible.”
