On July 22, 2024, A&W Revenue Royalties Income Fund (TSX: AW.UN) and A&W Food Services of Canada Inc. agreed to a strategic combination to form A&W Food Services NewCo, a publicly traded QSR franchisor. The transaction valued at $37.00 per unit, representing a 30% premium, allows unitholders to choose between cash or shares, subject to proration with a $175.6 million cash cap. The new entity will maintain the annualized dividend rate of $1.92 per unit and aims to leverage growth opportunities across A&W's business, including new restaurant openings and innovative concepts like Pret A Manger.

Unitholders benefit from full participation in A&W's growth, attractive share price potential, enhanced liquidity, and greater financial flexibility. The transaction preserves an income stream via quarterly dividends and offers significant value through a simplified corporate structure.

The deal involves a statutory plan of arrangement under the Canada Business Corporations Act, with closing expected in October 2024, subject to court, regulatory, and unitholder approvals. Post-transaction, A&W Food Services NewCo will have approximately 24 million shares outstanding, with 41% owned by existing Fund unitholders.

Legal advisors for the transaction were Davies Ward Phillips & Vineberg LLP for the Fund and Stikeman Elliott LLP for A&W Food Services. Financial advisors included RBC Capital Markets for the Fund and CIBC Capital Markets for A&W Food Services. TD Securities acted as an independent valuator.