Good morning!

Foodtastic wants takeout, but MTY’s board isn’t biting. Shopify’s revenue miss wasn’t much easier to digest.

Meanwhile, Organigram found a more willing partner in Aurora, with the cannabis rivals agreeing to combine.

Let’s get into it.

MARKET RUNDOWN

Yesterday’s Close

Shopify’s revenue miss and concerns about Thomson Reuters’ AI spending dragged the TSX lower, with weaker gold adding pressure on miners.
Dip-buying in AI heavyweights lifted the S&P 500 and Nasdaq, outweighing Apple’s decline after it warned rising memory chip costs would squeeze holiday-quarter margins.

BRIEF OF THE DAY

Foodtastic Unveils $1.5B Takeover Proposal for MTY after Board Rejection

MTY Foodtastic Potential Hostile Takeover

The proposal: Montréal-based restaurant franchisor Foodtastic made public a $43.00/share cash proposal to acquire MTY Food Group (TSX:MTY), after MTY’s board rejected its approaches. The non-binding proposal values MTY’s equity at ~$982M, or ~$1.5B including debt, and represents a ~32% premium to its October 30th closing price.

The businesses: Foodtastic has ~1,200 restaurants in its network, including Second Cup and Freshii. Montréal-based MTY has ~7,000 locations across brands including Thai Express and Cold Stone Creamery, where most are run by franchisees whose fees and royalties generate most of MTY’s profit.

The backstory: By November 2nd, MTY’s shares had fallen ~55% from their February 2023 all-time high. Facing softer restaurant demand and pressure on company-operated stores, it ended a nearly year-long strategic review last month without a sale. Its chosen path: simplify the brand portfolio, reduce direct restaurant ownership, and return more cash to shareholders via dividends and buybacks.

Why talks stalled:

Foodtastic’s account: It says MTY rejected its October 15th and 20th proposals without substantive dialogue. Foodtastic argues MTY accumulated too many brands without generating enough growth, and that private ownership would allow a longer-term turnaround.
MTY’s response: It says Foodtastic had already received multiple extensions of exclusive negotiations during the strategic review to secure financing and complete a transaction. The board subsequently reviewed the non-binding October proposals and rejected them as not in shareholders’ best interests.

Still conditional: Foodtastic continues to seek a negotiated deal, although Bloomberg reports it has not ruled out other approaches (e.g., a hostile takeover) if MTY’s board refuses talks. Foodtastic says financing would be fully committed when definitive agreements are signed.

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💼 Why this matters: By making its proposal public, Foodtastic is trying to turn shareholder support into pressure to reopen negotiations that MTY’s board considers finished. Investors now have a concrete cash proposal against which to judge MTY’s turnaround plan, putting pressure on directors to demonstrate why remaining independent offers greater value than a take-private.

HEADLINE RECAP

In Canada

Shopify (TSX:SHOP) plunges as revenue misses for first time since 2022 (BBG)
Carney credits U.S. with “asking less” and “offering more” in revitalized trade talks (GM)
Québec expects to import more power after U.S. utility deals (BBG)
Thomson Reuters (TSX:TRI) revenue rises 10% as use of AI-based software tools ramps up (GM)
Bank of Canada says fiscal policy isn’t fuelling inflation yet (BBG)
Canada’s “maple bonds” underperform on wave on AI-linked debt sales (BBG)
Suncor Energy (TSX:SU) tops profit estimates on higher oil prices, margins (RTRS)
Business groups press Carney to relax Canada’s immigration curbs (BBG)

DEALS WITH CANADIAN PARTIES

M&A & Investments

MTY Food Group (TSX:MTY): The Montréal-based restaurant franchisor reaffirmed its rejection of Montréal-based Foodtastic’s non-binding cash takeover proposal that valued MTY’s equity at ~$982M (or at a ~$1.5B enterprise value), after Foodtastic made its bid public.
Brookfield (TSX:BN) and Qatar’s Qai partnered with U.K. power producer Drax Group to develop an AI data centre at its North Yorkshire power station, with £2.5B (~$4.7B) in potential first-phase investment and over £20B (~$37.6B) envisioned for the full project.
Organigram Global (TSX:OGI): The cannabis producer agreed to acquire medical-cannabis producer Aurora Cannabis (TSX:ACB) in a cash-and-stock deal valuing Aurora’s equity at ~$561M.
- BMO advised Organigram; Fort Capital Partners advised Aurora; Origin Merchant Partners advised Aurora’s special committee. Each provided a fairness opinion.
Ada: The Toronto-based developer of AI customer-service agents agreed to merge with U.S. contact-centre software provider Dialpad in an all-share deal valuing Ada at ~$600M (~US$430M), down from its US$1.2B valuation during the 2021 tech boom.
OSI Maritime Systems: The B.C.-based naval navigation technology company was acquired by a consortium led by Novacap, with Export Development Canada (EDC) and BDC Capital.
- Jefferies and Shea & Co. advised Novacap; Lincoln International advised the sellers
Blue Moon Metals (TSXV:MOON) agreed to sell its Norwegian mining subsidiary, including 94.52% of the Nussir copper project, to ACG Metals for US$220M (~$308M) in shares.
- Canaccord Genuity advised Blue Moon; ATB Cormark provided a fairness opinion to Blue Moon’s board.
Fengate: The Canadian investment manager sold 3 gas-fired cogeneration plants totalling 892MW in Texas and Illinois to Energy Capital Partners.
- CIBC advised Fengate.
AtkinsRéalis (TSX:ATRL): The Montréal-based engineering services & nuclear firm acquired the remaining 30% of U.S. engineering consultancy David Evans Enterprises for ~US$130M (~$182M) in cash, taking full ownership.
TD Bank (TSX:TD) sold its Luxembourg property & casualty reinsurer, Cowen Reinsurance, to Premia Holdings.
Bond: The Toronto-based customer loyalty firm acquired JAM CRM, a Toronto agency specializing in customer relationship marketing.

VC & Growth Equity

Thryv Therapeutics: The Montréal-based developer of heart-disease drugs raised Series B funding led by InClin to finance its ASPIRE-HF heart-failure trial, with participation from Fonds de solidarité FTQ, Amplitude Ventures, Investissement Québec, Lumira Ventures, CTI Life Sciences Fund, and adMare BioInnovations.

ECM

Cardiol Therapeutics (TSX:CRDL): The Canadian biotech established an at-the-market equity program to sell up to US$75M of common shares, with proceeds earmarked for its CardiolRx recurrent-pericarditis treatment, CRD-38 clinical development, and working capital.
- Jefferies was the sales agent.
Organigram Global (TSX:OGI): The cannabis producer agreed to a £100M (~$187.5M) private placement with British American Tobacco (NYSE:BTI), priced at $1.33/share, to help fund its acquisition of Aurora Cannabis (TSX:ACB) and related expenses. The placement includes common and non-voting convertible preferred shares.

DCM & Credit

Organigram Global (TSX:OGI): The cannabis producer secured ATB Financial’s commitment to increase its credit facilities from $70M to $210M, supporting its acquisition of Aurora Cannabis (TSX:ACB).
Export Development Canada (EDC) announced US$25M of 4.58% senior unsecured notes due December 10, 2027.
- CIBC was sole bookrunner.

BAY STREET TRIVIA

Which Canadian company opened what was then the world’s largest cinema complex (inside Toronto’s Eaton Centre)?

FOR THE GROUP CHAT

💼 A $1.5B Food Fight