Prime Restaurants Inc. is asking an Ontario court to rule on whether a takeover bid from Fairfax Financial Holdings Ltd. is superior to an earlier offer from Cara Operations Ltd., which has offered less cash.
Prime, the company that owns East Side Mario's, Casey's and other restaurant chains, said on Friday that a hearing on its motion is scheduled for Dec. 7 at the Ontario Superior Court.
At issue, according to Prime, is Cara's position that the $71-million Fairfax offer doesn't treat all shareholders equally, and fails to meet the definition of a “superior proposal” outlined in Cara's earlier $59-million friendly takeover agreement with Prime.
Under the Fairfax proposal, certain current senior executives of Prime would be required to invest in the restaurant company after the takeover.
“The company believes that the Fairfax proposal is a superior proposal. If Cara's position prevails, Prime's shareholders would be deprived of the benefits of the Fairfax proposal relative to Cara's earlier proposal,” Prime said in a statement.
“The company intends to oppose Cara's position and, unless Cara exercises its right to match the Fairfax proposal or the motion is determined in Cara's favour, the company plans to pursue the Fairfax proposal.”
Fairfax is offering $7.75 a share for Prime, compared with Cara's offer of $7. Both offers include a 25-cent special dividend to Prime shareholders.
Fairfax would also pay approximately $2.2-million to Prime for expenses including a termination free payable to Cara under the original friendly deal between the two restaurant companies.
Cara has said Prime's restaurants would fit into its own holdings, which include Swiss Chalet, Harvey's, Milestones, Montana's Cookhouse and Kelsey's restaurants.
Toronto-based Fairfax is primarily an insurance holding company but has been looking to diversify into other industries.