RBD
04/03/2016 08:30
GENERAL
PRICE SENSITIVE
REL: 0830 HRS Restaurant Brands New Zealand Limited
GENERAL: RBD: Restaurant Brands Acquires KFC Business in Australia
3 March 2016
NZX
Restaurant Brands Acquires KFC Business in Australia
Key Points
o Restaurant Brands NZ Limited ("RBD") is to acquire 100% of the shares in
QSR Pty Limited, the largest KFC franchisee in New South Wales Australia,
for $A82.4 million.
o QSR Pty Limited is a well-established and profitable operator with 42
stores, generating sales in excess of $A100 million and store EBITDA of over
$A15 million per annum.
o The transaction is expected to be EPS accretive for RBD in FY17.
o The acquisition will be partially settled with Restaurant Brands New
Zealand Limited scrip of 5 million ordinary shares. The balance will be
funded through debt.
o Settlement is expected to be completed by the end of April 2016, following
which the principal of the vendor, Mr Stephen Copulos will be invited to join
the Restaurant Brands New Zealand Limited board.
Overview
Restaurant Brands New Zealand Limited ("RBD") today announced it has entered
into a conditional agreement to purchase 100% of shares in QSR Pty Limited
("QSR"), an Australian company which owns and operates 42 KFC stores in New
South Wales, Australia. QSR is currently owned by interests associated with
the Copulos Group.
The transaction is subject to a number of conditions, including approval from
the franchisor, Yum! Restaurants International and other conditions which are
customary for a transaction of this nature. RBD expects the transaction to
settle by the end of April 2016, although the actual settlement date will
depend on when the agreement becomes unconditional.
RBD Chairman Ted van Arkel believes the transaction represents a strategic
growth opportunity for RBD.
"The acquisition is an opportunity for Restaurant Brands to gain a scale
position in the New South Wales quick service restaurant market, leveraging
our strong relationship with Yum! Restaurants International and successful
track record owning and operating KFC stores".
QSR's KFC stores are located in urban Sydney and New South Wales regional
locations. QSR has been a KFC franchisee for the past 17 years and is the
largest KFC franchise in New South Wales (by number of stores). The business
has been consistently profitable and QSR is considered to be a very competent
operator, winning the Yum! Franchisee of the Year Award for New South Wales
for the 2015 year.
QSR is currently generating sales in excess of $A100 million per annum and
store EBITDA in excess of $A15 million per annum.
RBD Chief Executive Russel Creedy said "the acquisition comprises of a high
quality portfolio of stores located in a number of strategic urban locations
in Sydney and the wider New South Wales. We see the acquisition as an
opportunity to expand RBD's geographical footprint of KFC stores in a market
with considerable further expansion opportunities."
Consideration
The transaction is for a total consideration of $A82.4 million, on a cash
free basis and including debt repayment, and subject to net working capital
adjustments. The transaction will be settled through a combination of scrip
and cash:
o RBD will issue five million new ordinary shares to Copulos Group interests
as part of the settlement. The shares will be issued at $NZ4.16 per share,
being the volume weighted average trading price (VWAP) over the 10 days prior
to this announcement. No discount has been applied in determining the issue
price. The shares, which will represent 4.86% of RBD's total share capital
after being issued, will be subject to a 12 month escrow term during which
they cannot be sold (subject to certain limited exceptions)
o The balance of the settlement price of approximately $A62 million will be
funded by debt through new facilities. Post transaction, RBD is expected to
have total debt outstanding of approximately $NZ82 million.
Mr Stephen Copulos has been invited to join the RBD board following
settlement. Mr Copulos has had considerable experience in the KFC business in
Australia for a number of years and is expected to bring a level of expertise
and understanding of the Australian KFC market to the board.
The Chairman of RBD said "we are pleased to have agreed a mix of
consideration with Stephen Copulos which incorporates the issue of shares to
align our interests in growing the Australian KFC portfolio. With a long
standing presence in the Australian quick service restaurant industry we
believe Stephen will provide a unique level of expertise and understanding of
the Australian market to grow."
Impact on RBD
The benefits of the acquisition are expected to flow through from the second
quarter of the FY17 year, and it is anticipated that the transaction will be
EPS accretive from the outset. As part of integrating QSR into RBD, the
future of two underperforming QSR stores will be reviewed.
RBD has incurred one off (non-trading) transaction costs of approximately
$NZ1 million which is expected to impact the FY16 year end results. There
will also be stamp duty and other charges on settlement that will similarly
impact the FY17 result.
Following the acquisition and allowing for corporate costs for the QSR
business, RBD is expected to generate annual turnover in excess of $NZ500
million and EBITDA of $NZ70 million (assuming a NZD/AUD exchange rate of
0.93).
For further information please contact
Russel Creedy Grant Ellis
CEO CFO/Company Secretary
Phone: 525 8710 Phone: 525 8710
ENDS
End CA:00278770 For:RBD Type:GENERAL Time:2016-03-04 08:30:01
