Diversified Royalty (DIV) M&A announcement summary

Deal rationale and strategic fit

• Acquisition of Mr. Lube + Tires' franchisor business for CAD 235 million targets a high-performing, market-leading franchise with strong same-store sales (7.2–7.25% CAGR) and adjusted EBITDA growth (14.7% CAGR) over 10 years.

• The deal accelerates growth, deepens exposure to a proven franchise model, and aligns with a long-standing partnership and DIV’s strategy of acquiring predictable, growing royalty streams.

• Management's continued equity stake and leadership retention signal confidence and alignment of interests.

• Succession planning and shareholder transition at Mr. Lube + Tires created a timely opportunity for the acquisition.

Financial terms and conditions

• Purchase price is CAD 235 million, funded by CAD 212–212.5 million in senior debt, CAD 20.6 million rolled management equity, CAD 13.7 million in DIV shares, CAD 34 million cash on hand, and CAD 41.1 million from an acquisition facility.

• Non-management equity holders receive approximately 3.4 million shares at $3.98/share; management retains a ~4% interest.

• Estimated transaction costs are $2 million.

• Mr. Lube + Tires will provide an $11.6 million non-interest-bearing loan to fund GST related to the acquisition.

Synergies and expected cost savings

• Estimated adjusted EBITDA for the combined business is $58–58.7 million in the 12 months post-closing, up from $45.9 million in 2025, reflecting synergies and operating leverage from new store growth.

• Pro-forma distributable cash per share is expected to increase by 11–11.2%, from $0.3128 to $0.3478.

• Full ownership enables realization of all system sales and profitability, not just royalty income.