MTY Food Group (MTY) announced Monday that one of its wholly owned subsidiaries has entered into an agreement to acquire the assets of Küto Comptoir à Tartares, a rapidly growing tartare restaurant chain.
The Küto network currently has 31 points of sale, all franchised and located in Quebec. Thirteen of these locations have opened in the past 12 months.
On an annualized basis, the network’s system sales amount to between C$20 million and C$25 million. (See Insiders’ Hot Stocks on TipRanks)
Eric Lefebvre, CEO of MTY, said, “Küto is a young innovative brand that stands out for the quality of its products. It relies on a network of committed franchise partners who are just as dynamic. Küto benefits from a loyal customer base who are passionate about high-end tartares and novelty menu items. It offers significant growth potential for the years to come.”
Jean-Michel Paquet, current owner of Küto, will continue to lead the brand, which will also keep its head office and central kitchen in Delson, Quebec.
The transaction is expected to close within the next 30 days, but is subject to several conditions.
On October 12, TD Securities analyst Derek Lessard maintained a Hold rating on MTY, and raised its price target to C$70 (from C$65). This implies 8.2% upside potential.
Overall, consensus among Wall Street analysts is that MTY is a Hold, based on two Buys, four Holds and one Sell. The average MTY Food Group price target of C$72.50 implies 12.1% upside potential to current levels.
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