Canadian franchisor and operator of multiple concepts of restaurants MTY Food Group has reached a definitive merger agreement to acquire all of the issued and outstanding shares of Papa Murphy’s Holdings.

The US-based franchisor and operator of Take ‘n’ Bake pizza brand will be purchased for approximately $190m.

It’s current transaction value is $6.45 per share, which is expected to increase MTY’s exposure in the US pizza market.

MTY will fund the transaction using cash on hand and its existing credit facility. It will also repay Papa Murphy’s net debt outstanding of approximately $77.4m.

Established in 1981, Papa Murphy’s operates over 1,331 franchised and 106 corporate-owned restaurants in 37 US states, Canada and the UAE.

Take ‘n’ Bake offers scratch-made pizzas along with grab ‘n’ go items such as salads, sides and desserts.

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The boards of directors of both companies have unanimously approved the terms and conditions of the merger agreement.

“We expect the combination of these two companies and the expertise it brings to produce tremendous opportunities for MTY’s US expansion objectives.”

Papa Murphy’s chairperson of the board of directors Jean Birch said: “The board of directors and our advisors have thoroughly evaluated all options available to us and are confident that this agreement provides immediate value to our stockholders at a premium over our current share price.

“Merging our unique, differentiated brand with a global leader in franchised restaurant concepts will accelerate on-going efforts to enhance our convenience and relevance and maintain our position as the number one Take ‘n’ Bake pizza chain in the US.”

The transaction is currently subject to customary conditions, including antitrust clearance and the tender of a majority of the outstanding shares of Papa Murphy’s common stock. It is expected to be completed in the second quarter of this year.

Following the completion of the transaction, the combined entity will have approximately 7,378 stores globally.

Papa Murphy’s will become a wholly-owned subsidiary of MTY and will be operated as an independent brand.

MTY will retain Papa Murphy’s seasoned management team and employees expertise, as well as maintain the current support centre in Vancouver, Washington.

The company also intends to work with Papa Murphy’s to make capital investments with a focus on growing top line sales and increasing franchise partner profitability.

MTY CEO Eric Lefebvre said: “We expect the combination of these two companies and the expertise it brings to produce tremendous opportunities for MTY’s US expansion objectives.”

Furthermore, MTY will receive approximately $5.7m termination fee from Papa Murphy’s if the transaction is not completed.

Last month, a subsidiary of MTY Food Group acquired substantially most of the assets of South Street Burger for approximately $5.1m.