A&W Food Services of Canada Inc.’s publicly-traded income fund announced Monday that the two organizations will merge into one public company; a move the popular burger chain’s CEO says will increase flexibility and growth prospects.
The A&W Revenue Royalties Income Fund trades on the Toronto stock exchange and is the public arm of the restaurant chain, which itself is privately owned. The fund collects a royalty from sales at A&W restaurants and turns it into distributions for unitholders.
Susan Senecal, A&W Food Services’ chief executive, told BNN Bloomberg in a Monday interview that the decision to merge what she calls the “two halves” of the Canada-wide business offers “fantastic potential.”
“Growth has been our strategy for over 30 years, and that is certainly going to continue and I think be enabled even further by this new financial structure that will offer us more flexibility and enhanced opportunities for growth and success,” she said.
“By combining the two as a publicly traded company, we’ll be able to really enhance the value for everyone; it’s a bit of a win-win-win.”
The deal, subject to regulatory approval, is expected to close in October. Current A&W Revenue Royalties Income Fund unitholders can either accept $37 per unit now – a 30 per cent premium to what they were worth before the news – or have units transferred as shares in the new company.
Units of the income fund were up nearly 15 per cent in midday trading in Toronto on Monday.
Senecal said the new company will be “strategically driven,” with a focus on growth for its franchisees. She said a single public entity with a more traditional capital structure will help A&W compete more effectively with other players in the quick-service restaurant space.
Senecal also noted that the new company will continue to focus on value for its customers, given the financial pressures being felt by Canadian consumers due to elevated inflation and high living costs.
“We’re really focused on value… especially when it comes to families; people coming to A&W with more than one person,” she said.
“It becomes even more important to offer them that great quality that we’re known for, but value so that our guests can enjoy A&W just as often as they’d like.”
