Prime Restaurants Inc. (EAT.TO) announced that it has terminated the acquisition agreement between Cara Operations Limited and has entered into an acquisition agreement with Fairfax Financial Holdings Limited.
In addition, the company announced that it has entered into a settlement agreement with Cara, Fairfax, and certain executive officers of the Company pursuant to which the parties have agreed to a full and final mutual release of all obligations relating to the Cara Agreement and Cara's proposed acquisition of the issued and outstanding shares of Prime Restaurants.
As per the Fairfax Agreement, Fairfax will acquire Prime Restaurants. Shareholders of Prime Restaurants will receive $7.50 per Share in cash on the effective date from Fairfax. In addition, the Company is entitled to pay a special dividend to Shareholders on the effective date in an amount not to exceed $0.08 per Share. It is possible that no special dividend will be paid. The transaction is expected to close by early 2012 and is not conditional on financing.
The $7.50 per Share to be received by Shareholders from Fairfax pursuant to the Transaction represents: a 7.1% premium over the $7.00 per Share total amount to be received by Shareholders under the Cara Agreement.
The company said that its board of directors has unanimously recommended that Shareholders vote in favour of the Transaction.
The Transaction provides for a non-solicitation covenant on the part of the Company, subject to a customary "fiduciary out" provision, which entitles the Company to consider and accept a superior proposal, subject to the right of Fairfax to match the superior proposal and the payment to Fairfax of a termination payment of $3.50 million.
In October 2011, Prime Restaurants had said that Cara Operations Limited has agreed to acquire all of its issued and outstanding shares. Prime Restaurants had said its shareholders will receive a total of $7.00 per share on the effective date.
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