(Adds CEO comments, details)
March 31 (Reuters) - Canada's Cara Operations Ltd CAO.TO ,
owner of the Swiss Chalet casual dining chain and Harvey's
burger outlets, said on Thursday it would buy St-Hubert BBQ, one
of Quebec's largest casual dining chains, for C$537 million
($415 million).
Shares of Cara, which went public a year ago, jumped 16
percent to a record intraday percentage gain.
Toronto-based Cara, Canada's largest operator of
full-service restaurants, had indicated it was looking to expand
through acquisitions.
Analysts had flagged privately held St-Hubert as one of the
most likely targets for Cara, which is controlled by dealmaker
Prem Watsa's Fairfax Financial Holdings Ltd FFH.TO .
St-Hubert will focus on building Cara's brands in Quebec,
rather than growing its own brands outside the province, Cara
CEO Bill Gregson said on a conference call with analysts.
Cara operates a number of Swiss Chalet and Harvey's combo
stores outside Quebec, and St-Hubert's team will explore what
works in the province, Gregson said.
Both Swiss Chalet and St-Hubert are known for their
rotisserie chicken meals, but the two chains share little
geographic overlap. More than 90 percent of St-Hubert's 117
restaurants are in Quebec, where Swiss Chalet does not have a
presence.
St-Hubert also operates food manufacturing plants and
distribution centers in Quebec.
Cara has said it wants to boost revenue to $2.5 billion-$C3
billion in five to seven years, up from C$1.7 billion in 2014.
The acquisition of St-Hubert, which had system sales of
C$620 million in 2015, will move Cara much closer to that
target.
The deal also gives Cara an opportunity to expand its
offerings through grocery chains including Loblaw Cos Ltd
L.TO , Costco Wholesale Corp COST.O and Metro Inc MRU.TO ,
where St-Hubert sells products such as marinades, pot pies,
seasonings and desserts.
Cara said it planned to fund the deal through a credit
facility, raised to C$700 million from C$150 million.
The company also said it will consider offering shares to
eliminate or reduce the need for a two-year term loan, which is
part of the credit facility.
Cara's shares were up 14 percent at C$30.40 in morning
trade, while Fairfax was down marginally at C$716.
($1 = 1.29 Canadian dollars)