Retail Food Group buys Gloria Jean’s for $163.5m
RETAIL Food Group, the company behind Michel’s Patisserie and Donut King, has bought Gloria Jean’s Group for $163.5 million and is seeking to raise $40m to help fund the purchase.
Gloria Jean’s chief Nabi Saleh. Source: News Limited
The global coffee chain had long been a target for Retail Food Group, and adds to its current coffee businesses, Cafe2U and The Coffee Guy.
Gloria Jean’s has 358 stores in Australia, 87 in the United States and franchises in 40 other countries.
Retail Food Group (RFG) will pay $153.5 million in cash plus $10 million in its own shares, plus up to a further $16.4 million depending on the company’s performance.
The acquisition is expected to deliver $13m of synergies over three years.
Retail Food Group is raising $40m towards the purchase via a placement through the issue of 8.3m shares at $4.80 each.
In addition, a share purchase plan for up to $15m will be considered and $10m of vendor equity would be used to fund the acquisition.
The raising is at a 0.8 per cent discount to its last closing price.
The executive chairman of Gloria Jean’s, Nabi Saleh, has promised to stay with the business for at least another two years, along with his senior management team.
He said Retail Food Group’s reputation as a food and beverage operator and expertise in building franchise businesses made them ideal to lead the continued expansion of Gloria Jean’s.
Gloria Jean’s was established in Chicago in 1979 by Gloria Jean Kvetko, and under the ownership of Mr Saleh expanded to Australia in 1996.
Retail Food Group is buying the intellectual property rights to the Gloria Jean’s and It’s a Grind brands, and will be the operational manager of the business in Australia and the US.
It will also take ownership of its wholesale coffee roasting operations in Australia and the US, and will be the franchisor of the business in 40 countries.
The purchase of Gloria Jeans is expected to be settled by December.
On the back of the Gloria Jean’s acquisition, Retail Food Group has upgraded its guidance to a 36 per cent lift in net profit for the 2015 financial year compared to a 15 to 20 per cent increase previously.
The business, based in Southport, Queensland, is also the franchisor and owner of Brumby’s Bakeries, bb’s Cafe, Pizza Capers, Crust and Big Dads Pies brands.
RFG shares were trading up 2c to $4.86 in early afternoon trade.
Source : The Auistralian Brigdet Carter October 24th 2014
