Unbundling of SA Master Licensee Model acquisition of Cape Franchising
FAMOUS BRANDS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1969/004875/06)
Share code: FBR ISIN code: ZAE000053328
Famous Brands is pleased to announce that it has successfully completed the final phase in the process of acquiring all master licenses in South Africa having entered into an agreement for the purchase of the business of Cape Franchising.
Kevin Hedderwick, Chief Operating Officer of Famous Brands says, “We are delighted to have concluded this acquisition which, in the immediate short term will be earnings neutral, but will in the long term, unlock further value for Famous Brands and its shareholders.”
Hedderwick explains that the master licensee model, a strategic intervention entered into by the group during the 1990’s, does not align itself with the current Famous Brands business model and so ,in September 1997 Famous Brands bought back the master licence agreement for KwaZulu Natal and the Eastern Cape master licence agreement in November 2002. This latest acquisition of the business of Cape Franchising concludes the buyback process.
The businesses being acquired include a licensing agreement for the Steers and Debonairs Pizza brands as well as the distribution agreement which entitled Cape Franchising to manufacture and distribute all of Famous Brands products within the territory. The successful conclusion of this agreement will result in Famous Brands taking full ownership of their franchising and distribution businesses within the Western Cape market.
“We have bought back a contract which had 10 years left to run with a further 25 year option. This is a strategically significant acquisition for the group.” says Hedderwick. The acquisition consideration of approximately R150 million is expected to deliver a number of synergistic benefits that will be explored post the effective date of 1 March 2008 and is subject to a number of conditions precedent including that of the necessary due diligence as well as Competition Commission approval. All operational personnel will be taken over by Famous Brands however, the current directors of Cape Franchising will be exiting the business as at the completion date. Nick Efstathiou, Managing Director of Cape Franchising says, “I and my fellow directors and shareholders are extremely proud to have been associated with Famous Brands since 1983. We particularly value the major role we were able to play in establishing and growing the Steers and Debonairs Pizza brands in the Western Cape. We have always had total belief in and commitment to the growth of the business and its products. We wish Famous Brands well, and have no doubt that they will go from strength to strength.” Hedderwick concludes “We would like to thank and congratulate the directorate of Cape Franchising on a job well done in the Western Cape. We have great respect for the manner in which they have built and maintained our brands over the years, but it is strategically important that we control our own destiny within the South African landscape which this acquisition represents”.
Notes to editors:
The Group’s brand portfolio includes Steers (524], Wimpy including UK (642), Debonairs Pizza (315), FishAways (112), Mugg & Bean (108), tashas (6), House of Coffees (19), Brazilian/Brazilian Café (48), Blacksteer (12), Giramundo (6), Keg (27) and McGinty’s (5), Vovo Telo (3) and O’Hagan’s (26).
The Group also manufactures and supplies its franchisees and the retail trade with a wide range of meat, sauce, bakery, ice cream, fruit juice and mineral water products.
For further information:
Chief Executive Officer
Famous Brands Ltd
Telephone: 011 651 5812
Mobile: 083 395 8608