Cara Operations Limited (TSX:CARA) signed a binding letter of intent to acquire Keg Restaurants Ltd. from Fairfax Financial Holdings Limited (TSX:FFH) and David Aisenstat for approximately CAD 230 million on January 23, 2018. Under the terms, Cara will pay to shareholders of Keg Restaurants an aggregate purchase price of CAD 200 million comprised of CAD 105 million in cash and 3.8 million Cara subordinate voting shares. Of the subordinate voting shares being issued, 3.4 million will be issued to Fairfax as partial consideration which will result in Fairfax beneficially owning 7.2 million subordinate voting shares following closing, representing approximately 25.8% of the issued and outstanding subordinate voting shares, and 19.9 million multiple voting shares of Cara, representing approximately 57.9% of the issued and outstanding multiple voting shares of Cara. In addition, Cara may be required to pay up to an additional CAD 30 million of cash consideration upon the achievement of certain financial milestones within the first three fiscal years following closing. Cara will fund the cash portion of the purchase price payable at closing by drawing on its existing credit facility. Post-closing, Cara intends to change its corporate name to reflect this new business composition. Keg Restaurants will continue to operate as it has previously under Aisenstat's leadership. The Keg Royalties Income Fund will remain in its current form and will continue to receive royalties from Keg restaurants operated by Keg Restaurants following the merger.

Pursuant to the deal, David Aisenstat, President and Chief Executive Officer of Keg Restaurants, will remain in this position while overseeing the three additional Cara brands. David Aisenstat will also join the Cara Board of Directors as Vice-Chairman. Bill Gregson will remain as President and Chief Executive Officer of Cara and will remain as Chairman of the Cara Board of Directors. The deal is subject to the finalization of definitive documentation and customary conditions, including the receipt of certain third-party consents and the approval of the Toronto Stock Exchange. The transaction was unanimously approved by the special committee of the board of directors of Cara, that comprised of directors that are independent of Fairfax, and the board of directors of Keg Restaurants. The transaction will close as soon as all conditions precedent will be satisfied which is expected to occur in Cara's current reporting quarter. The transaction is expected to be immediately accretive to Cara's adjusted diluted earnings per share. Scotiabank acted as fairness opinion provider to the special committee of the board of directors of Cara. Goodmans LLP acted as legal advisor to Keg Restaurants Ltd.