Second Cup urges shareholders to reject Cara's takeover offer

Company chairman Michael Bregman, whose family holds 24% of Second Cup shares, has been a vocal opponent of the bid. Investors Group has a 17% interest.

The Financial Post
November 17, 2001

Second Cup urges shareholders to reject Cara’s takeover offer
Hollie Shaw

Specialty coffee retailer Second Cup Ltd. yesterday urged its shareholders to reject an unsolicited takeover bid from the company's single largest shareholder, food conglomerate Cara Operations Ltd.

Cara, operator of the Harvey's and Swiss Chalet restaurant chains, said in August it would offer $21-million, or $7 a share, to almost double its 39% stake in Second Cup. Cara mailed the offer to shareholders yesterday.

"It's a partial bid and it's below the value of the shares as determined by an independent third party," said Robert Haft, who heads a special committee of independent Second Cup directors.

"We know that Cara has heard from a lot of shareholders who are unhappy about this."

Officials at Cara could not be reached late yesterday for comment.

Earlier this month, the committee said an opinion by TD Securities Inc. indicated Second Cup's common shares were worth $8.25 to $9.75, implying a mid-point of $9. Believing the bid would rise, shareholders bid up the price. Second Cup shares fell 45¢ yesterday to $7.50.

Second Cup has hired RBC Dominion Securities to seek out other offers and has been approached by several parties interested in buying the chain, Mr. Haft said, adding there are no offers to disclose. The committee has tried to negotiate with Cara, to no avail, he added.

Company chairman Michael Bregman, whose family holds 24% of Second Cup shares, has been a vocal opponent of the bid. Investors Group has a 17% interest.

If the bid succeeds, Cara will own up to about a 71% stake in Second Cup, which has 400 franchised outlets across the country.

Cara's offer expires on Dec. 22.

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