Freshii, a quick-service restaurant chain stock (TSE:FRII) closed the day’s trading session at C$2.22, or about 133.7% higher than Friday’s close. What sparked such a massive gain? It was announced that Freshii will be bought out by Foodtastic Inc for a price of C$2.30 per share (C$74.4 million), 148% higher than its 20-day volume-weighted-average share price. All members of Freshii’s board, including the founder, support the transaction, and it’s expected to close in Q1 2023.
The move is anticipated to assist Freshii in growing its name and profitability. It will also benefit Foodtastic by allowing it to expand into a new category. Foodtastic’s CEO stated, “The way we’re structured, we can add more brands, and we looked at all the different segments we’re not really in yet, and the healthy salad section was one of them.”
Foodtastic has made quite a few acquisitions in the past few years, acquiring Pita Pit and Milestones last year, along with Quesada Burritos & Tacos and Shoeless Joes more recently. It’ll be interesting to see if Foodtastic will acquire another publicly-listed food chain in the near future.
The Takeaway
This deal creates plenty of value for FRII shareholders, and Foodtastic has a good chance of turning around Freshii, which was struggling with falling profitability and was near an all-time low. For those that are willing to bet on the deal going through, there’s an eight-cent spread between the stock’s current price and the deal price, creating some profit potential. However, if the deal falls through somehow, FRII stock would likely tank.
