Diversified Royalty Corp. has agreed to acquire the Mr. Lube + Tires franchisor business in Canada for $235 million, a move that would significantly expand its exposure to one of the country’s largest automotive service networks.
The deal, expected to close by the end of the second quarter of 2026 pending regulatory approvals and customary conditions, builds on a long‑standing relationship between the two companies. Diversified Royalty (DIV) has been partnered with Mr. Lube + Tires since 2015 through a royalty structure and already owns the brand’s intellectual property, licensing it back to the business.
Under the transaction, Diversified Royalty and a newly formed subsidiary will acquire the remaining assets it does not currently own, including franchise agreements and supplier contracts. Mr. Lube + Tires’ real estate leases will remain with the existing entity, with the purchaser entering a management agreement to oversee those arrangements.
Diversified Royalty said the acquisition will deepen its relationship with its largest and best‑performing royalty partner while positioning the company for further growth.
“DIV looks forward to completing the acquisition and increasing its economic exposure to Mr. Lube + Tires,” said Sean Morrison, chief executive officer of Diversified Royalty.
He added that the company plans to work closely with management to continue expanding the business and strengthening its position as a leading automotive services franchise in Canada.
The announcement noted that Mr. Lube + Tires has been a key contributor to Diversified Royalty’s portfolio, generating strong same‑store sales growth averaging 7.2 per cent over the past decade. The chain’s adjusted EBITDA has grown at a compound annual rate of 14.7 per cent during the same period, supported by ongoing network expansion. The company opened 16 new locations in 2025 and plans to add 18 more in 2026, with further growth expected in 2027.
Pamela Lee, president and chief executive officer of Mr. Lube + Tires, said the transaction marks the next phase in a long‑standing partnership.
“Mr. Lube + Tires has been partners with DIV for over 11 years, and we are excited to continue our partnership with DIV and unlock new growth opportunities for our franchisees,” she said.
Founded in 1976, the business operates a network of 187 locations, with franchisees running nearly all sites. The quick‑service chain now generates more than $500 million in systemwide sales annually and serves over two million customers each year.
Diversified Royalty intends to finance the acquisition through a combination of cash on hand, existing credit facilities, new debt at the subsidiary level and equity contributions, including rolled equity from Mr. Lube + Tires management. The company said it does not expect to raise new equity to complete the transaction and estimates the deal will increase distributable cash per share on a pro forma basis.
As part of the financing structure, the purchaser has secured a new credit facility of up to $222.5 million, including term and revolving components, while Diversified Royalty will also draw on its existing acquisition facility.
The acquisition is expected to transition Mr. Lube + Tires from a royalty‑based income stream to a more integrated operating platform within Diversified Royalty’s portfolio. The company said it will continue to prioritize franchise‑based investments across North America but sees additional upside through greater operational participation in Mr. Lube + Tires.
The existing Mr. Lube + Tires leadership team is expected to remain in place and play a central role in managing and expanding the business. Lee is also expected to join the board of the purchasing entity.
Diversified Royalty said the acquisition represents a rare opportunity to fully integrate a high‑performing franchisor business in a growing segment of the automotive aftermarket, as demand for convenient vehicle maintenance continues to rise.
Image credit: Depositphotos.com
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