Famous Brands Acquires 51% of Retail Group (Pty) Ltd, Botswana

Famous Brands Acquires 51% of Retail Group (Pty) Ltd

Launching New Era in Growth Strategy

Johannesburg; Tuesday, 23rd June 2015: Famous Brands has acquired a 51% controlling stake in Retail Group (Pty) Ltd, Botswana (“Retail Group”), the Group’s Master License partner in Botswana, marking the commencement of a new thrust in Famous Brands’ strategic growth programme.

Group Chief Executive, Kevin Hedderwick, explains, “This transaction aligns with our deliberate approach to either acquire or take a controlling stake in existing Master License territories in neighbouring countries whereby we can exercise complete influence over our brands. In addition, we want to test our mettle in company-owned stores in advance of a potential broader foray into that arena. This transaction provides us with the opportunity to achieve both goals at minimum risk.”

“Famous Brands continues to set itself ambitious growth targets,” adds Hedderwick, “and this strategy affords us a strong new avenue for expansion.”

The purchase consideration falls below the threshold of a categorised transaction in terms of the Listings Requirements of the JSE Limited and will be settled from cash reserves. The transaction is subject to approval from the Competition Commission of Botswana.

Given the Group’s critical mass in the region, opportunities will be investigated to provide the business with in-house logistics and manufacturing services, which are currently outsourced. The operation will also benefit from Famous Brands’ expanding brand portfolio.

Retail Group is currently owned by a consortium of investors, with the majority stake held by Craig Mackenzie, a long-standing business partner of Famous Brands and founder of Debonairs Pizza in 1991. Established in 2000, Retail Group comprises 19 company-owned restaurants and manages nine franchised restaurants across Botswana. The portfolio of brands includes Wimpy, Debonairs Pizza, Mugg & Bean, Milky Lane and Steers.

Hedderwick notes, “Retail Group is very well managed and a role model Master License business. The management and operational team, which are being retained, are exceptional and central to facilitating a seamless integration of the business into Famous Brands’ structure.”

Mackenzie comments, “This transaction fully aligns Retail Group with Famous Brands, thereby providing the business with more effective access to the extensive resources afforded by Africa’s leading franchise group. We believe that the resulting blend of skills and experience will culminate in strong growth opportunities for the operation in Botswana and beyond.”

Illustrating the compelling rationale for the transaction, Hedderwick says, “The food services sector in Botswana is growing rapidly, reflected by the 44% increase in franchised food service outlets industry-wide in the past five years. Per capita GDP of US$16,400 is the third highest in Africa, ahead of Mauritius and South Africa.” He adds, “Political and economic stability have resulted in a stable labour market, while relatively lower tax and VAT rates compared to South Africa offer a further incentive for investment.”

Hedderwick elaborates, “The opportunity exists to grow Famous Brands’ share of this market through the existing brand portfolio and additional and/or new brands. While Wimpy is the leading Casual Dining restaurant brand in Botswana, and Debonairs Pizza the entrenched preferred pizza brand, the recently opened maiden Steers and a second Mugg & Bean restaurant in Gaborone have delivered beyond our expectation and illustrate the potential to grow these offerings into other cities and towns.”

As at 28 February 2015, the contribution from Famous Brands’ Rest of Africa business comprised 8.9% of total system-wide franchise sales. Hedderwick concludes, “We have stated frequently that we have ambitious and deliberate plans to grow our business outside of South Africa, and we foresee our operations in the Rest of Africa becoming increasingly significant to the Group over time. This acquisition advances our stated strategy to continue to build on existing momentum in the region in line with our first-to-market and narrow-and-deep strategy.”

 

Notes to editors:

Cater Chain is compliant with HACCP, an internationally accepted food safety assurance programme, as well as other relevant legislation including: R962 (regulations for food premises); Transport of Food Act 54 (1972); SANS 10049 (food hygiene management) and R146 (labelling and advertising of foodstuffs).

For further information:

Kevin Hedderwick
Group Chief Executive
Famous Brands Ltd
Telephone: 011 651 5812
Julian Gwillim
Aprio
Mobile: 082 452 4389