Canadian Tire Corp. Ltd. on Aug. 8 said it agreed to acquire Party City Holdco Inc.'s Canadian retail business and assets for C$174.4 million.
The Toronto-based retailer said it intends to grow Party City's 65-store network in the country and build store-in-store, pop-ups and "in-line" aisles across its retail outlets.
Party City's wholesale unit Amscan Inc. will also provide party supplies to Canadian Tire Corp., doubling Amscan's shipments to Canada over the course of the initial 10-year agreement.
The 2018 pro forma EBITDA of the Party City locations in Canada totaled approximately C$17.6 million, New York-based Party City said in a statement.
Party City said it will use the proceeds from the sale to pay down its debt as part of its goal to reduce its net leverage over the upcoming years.
Canadian Tire Corp. expects the deal to be immediately accretive to EBITDA, diluted EPS and return on invested capital. It is expected to close by Oct. 1, subject to customary closing conditions.
Separately, Canadian Tire Corp. reported a 13.8% year-over-year increase in second-quarter normalized diluted EPS to C$2.97, missing the S&P Global Market Intelligence consensus normalized EPS estimate of C$3.01. The retailer's consolidated comparable sales rose 2.2% year over year.