MTY Food Group closes acquisition of Kahala Brands

Kahala Brands logoMTY Food Group announced yesterday that it had successfully closed the acquisition of Kahala Brands. The deal closed without any delays afterย Kahala Brands shareholders approved the merger last week. It’s still a bit too early to tell if this merger was indeed the merger arbitrage idea of the year as I called it in an earlier blog post. The final payout price is still unknown since it remains subject to post-closing working capital adjustments. I don’t expect a negative surprise here, but we’ll see. Since I bought the stock at $139 and the expected value of the merger consideration is roughly $155 I think it will work out very fine. Hopefully the cash will hit my account soon.

Disclosure

Author is long Kahala Brands

18 thoughts on “MTY Food Group closes acquisition of Kahala Brands

  1. Uros

    Thanks for having shared the idea.
    As always, your posts are of good quality, short and up to the point.

    Reply
  2. JG

    Well done! Please let us know what the final consideration will be (sometimes this is not publicly disclosed), as it can serve as a data point in making future decisions.

    Reply
    1. Alpha Vulture Post author

      Cashout hit my account today, have to check my brokerage statement tomorrow to see the exact dollar amount I got but looks like it was a bit more than $160/share. Think $160.36/share, but might be off by a few cents.

      Reply
      1. JG

        Seems you were right in your assumption the company would be conservative in their estimates. Thanks for sharing.

        Reply
          1. Dave

            I don’t get how they calculated the adjustments. The average price was around $42 which should have led to a payout of ~$155. Not that i’m complaining, just confused…

  3. Jony

    Nice pick in KAHL. I bought some and tendered successfully through IB. Then I added more but did not update my tender instructions so those additional shares did not get taken up. So I have some KAHL shares remaining in my account. Do you know if those will be taken up by MTY sometime soon or will these shares just be left in limbo? I notice KAHL is still traded on the pinks so guess I could sell them.

    Reply
    1. Alpha Vulture Post author

      I heard the same story from another investor. I would assume that you would get the cash at some point, but don’t know when. It’s a bit weird, haven’t seen this happen before after a merger was completed.

      Reply
    2. Jony

      UPDATE: Interactive Brokers closed out the remaining shares last night by way of a “Mandatory Offer Allocation”. So in my case at least I did not need to contact anyone in stock transfer, etc.

      Reply

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