Cara Operations Acquires 95 Per Cent of Second Cup

Cara Operations Limited, one of Canada’s leading food service companies, acquired 95 per cent of the common shares of Second Cup Limited that it did not already own on February 5, 2002. Second Cup is a leading specialty coffee company in Canada with approximately four hundred owner-operated cafes across the country. Total value of the deal is $47 million.

Cara, which prior to the offer was Second Cup’s largest shareholder holding a 39 per cent interest, announced on August 13, 2001 that it intended to make an offer for three million Second Cup common shares at $7 per share. If that offer had succeeded, Cara would have owned 71 per cent of Second Cup. On December 14, 2001, Cara amended its offer, submitting a bid for all shares at $7.50 each. On January 21, 2002, Cara increased its offer to $8 per share, which was recommended by Second Cup’s special committee and board of directors. Michael Bregman and members of his family, who collectively held 22 per cent of the Second Cup common shares, agreed to tender their shares to the improved offer.

When Cara announced that it intended to make its bid, Second Cup’s board of directors appointed a special committee comprised of Robert Haft, chairman, and Hugh Segal and Roy Sugden. The special committee appointed TD Securities Inc. to prepare the valuation, and retained RBC Dominion Securities Inc. as financial advisor.

Cara was represented by in-house counsel Ian Wilkie, and by Osler, Hoskin & Harcourt LLP, with a team led by John Evans that included Mark Trachuk, Donald Gilchrist and Katy Waugh (securities), Mark Gelowitz (litigation) and Allan Coleman.

Second Cup and its special committee were represented by Goodmans LLP, with a team led by Dale Lastman that included David Matlow and Kari MacKay (securities), Ben Zarnett, Jessica Kimmel and Nando De Luca (litigation) and Carrie Smit, Maureen Berry and Alan Bowman (tax). Wes Voorheis and Michael Woollcombe of Voorheis and Co. represented Michael Bregman.