Prime Restaurants Inc. (EAT.TO) said Monday that Cara Operations Limited has agreed to acquire all of its issued and outstanding shares, subject to certain conditions.
Prime Restaurants said its shareholders will receive a total of $7.00 per share on the effective date, comprised of $6.75 per share payable by Cara in cash and $0.25 per share as a special dividend from Prime Restaurants.
The transaction is expected to close on January 4, 2012.
The $7.00 per share total amount to be received by shareholders represents a 44% premium over the closing price of PRI's Class A limited voting shares on the TSX on October 14, 2011 of $4.85 per share and a 53% premium over the volume weighted average price of the Class A limited voting shares over the 20 trading days ended October 14, 2011 of $4.59.
The Company's board of directors, based on the recommendation of a special committee of independent directors, has unanimously recommended that shareholders vote in favour of the Transaction.
The Transaction is subject to a number of conditions, including (a) the completion of Cara's financing necessary to complete the Transaction; (b) the approval of the Company's shareholders at a special meeting; (c) approval of Ontario's Superior Court of Justice; and (d) certain other customary conditions.
The Acquisition Agreement includes a "go shop" provision allowing PRI to seek other buyers for the Company until Cara irrevocably waives its financing condition. In the event that Cara is unable to complete its financing, it will pay the Company a termination fee in the amount of $3 million.
Prime Restaurant Holdings Inc., which holds about 30% of the outstanding shares eligible to vote on the Transaction, has entered into a merger support agreement with Cara pursuant to which it has committed to vote its shares in favour of the Transaction, subject to certain terms and conditions. The Support Agreement automatically terminates if the Acquisition Agreement is terminated.
The Company's financial advisors are Morrison Park Advisors and its legal counsel are Goodmans LLP and Stikeman Elliott LLP. Cara's financial advisors are Scotia Capital Inc. and its legal counsel is Osler, Hoskin & Harcourt LLP.
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