(Reuters) - Canada's Cara Operations (>> Cara Operations Ltd), owner of the Swiss Chalet casual dining chain and Harvey's burger outlets, said Thursday it would buy St-Hubert BBQ, one of Quebec's largest casual dining chains, for C$537 million ($415 million), in a bid to gain a foothold in the province.

The deal was cheered by analysts and investors. Shares in Cara, which went public a year ago, closed 9.4 percent higher at C$29.15 on the TSX.

"Given the potential synergies that exist, not only on the cost side but also on the top-line, we believe Cara has only increased its positioning as the dominant restaurant operator in Canada, and as an attractive consolidator going forward," said Canaccord analyst Derek Dley, in a note.

Cara, Canada's largest operator of full-service restaurants, had indicated it was looking to expand through acquisitions. And

analysts had flagged privately held St-Hubert as one of the most likely targets for Cara, which is controlled by dealmaker Prem Watsa's Fairfax Financial Holdings (>> Fairfax Financial Holdings Ltd).

Swiss Chalet and St-Hubert are both well known for their rotisserie chicken meals, but the two chains share little geographic overlap. More than 90 percent of St-Hubert's 117 restaurants are in Quebec, where Swiss Chalet does not have a presence.

St-Hubert also operates food manufacturing plants and other facilities in Quebec.

"There's no retail to speak of really right now in Cara, and this team and the facilities they've got in Quebec are perfect for us and Quebec was the province we were most under-penetrated within, so we can use this to build not only more St-Hubert's in Quebec, but other restaurants too," said Fairfax President Paul Rivett.

Cara has said it wants to boost revenue to $2.5 billion-$C3 billion in five to seven years, up from C$1.7 billion in 2014.

The acquisition of St-Hubert, which had sales of C$620 million in 2015, will move Cara much closer to that target.

The deal also gives Cara an opportunity to expand its offerings through grocery chains, including Loblaw Cos (>> Loblaw Companies Limited), Costco Wholesale (>> Costco Wholesale Corporation) and Metro (>> Metro, Inc.), where St-Hubert sells products such as marinades, pot pies and seasonings.

Cara said it planned to fund the deal through a credit facility, raised to C$700 million from C$150 million. It also said it will consider offering shares to eliminate or reduce the need for a two-year term loan, which is part of the credit facility.

($1 = 1.29 Canadian dollars)

(Reporting by Euan Rocha in Toronto and Amrutha Gayathri in Bengaluru; Editing by Sriraj Kalluvila and Jonathan Oatis)

By Amrutha Gayathri and Euan Rocha