Domino's Pizza Group PLC Domino's German JV to acquire Hallo Pizza (0156U)
October 19 2017 - 2:00AM
UK Regulatory
TIDMDOM
RNS Number : 0156U
Domino's Pizza Group PLC
19 October 2017
19 October 2017
Domino's German Joint Venture to acquire Hallo Pizza
Domino's Pizza Group plc ("DPG"), the leading pizza company in
the UK, today announces that Daytona JV Limited (the "German Joint
Venture"), which operates the Domino's master franchise in Germany,
and in which DPG owns a one third stake, is to acquire Hallo Pizza
GmbH ("Hallo Pizza"), for a consideration of EUR32 million on a
cash and debt free basis(1) .
About Hallo Pizza
Hallo Pizza is the largest independent pizza chain in Germany
with a comprehensive national footprint of 170 franchise stores
throughout Germany. Hallo Pizza generated network sales of EUR80.2
million and normalised EBITDA of EUR3.5 million for FY16(2) .
Transaction rationale
The acquisition will strengthen the German Joint Venture's
market leading position and increase the store count in Germany
from 209 to approximately 300-340(3) following brand conversions,
accelerating progress towards its 1,000 store target. Existing
Hallo Pizza stores will be operated on a transitional basis until
franchisee contracts are converted to Domino's.
The transaction is also expected to improve the profitability of
former Hallo Pizza stores and existing Domino's stores for both
franchisor and franchisees as stores are converted to Domino's and
national advertising campaigns, social media initiatives and IT
innovations are leveraged over the larger store network.
The transaction is scheduled to complete in the first quarter of
2018. Following completion, the German Joint Venture will work with
the vendor and Hallo Pizza management to convert franchise
contracts to the Domino's brand over the next 2-3 years.
Acquisition consideration and funding
The purchase price for Hallo Pizza of EUR32 million will be
payable on completion of the transaction. An additional EUR20-30
million of costs are estimated to be incurred over the next 2-3
years to finance store conversions and other transaction costs. The
consideration and related costs are to be funded by the German
Joint Venture's shareholders, Domino's Pizza Enterprises Limited
("DPE") and DPG, in proportion to their current shareholdings.
Accordingly, DPG will fund one third of the purchase price on
closing of the transaction (EUR11 million) and one third of the
conversion and other transaction costs over the next 2-3 years.
Extension to joint venture agreement
In respect of the German Joint Venture, DPG and DPE have agreed
to extend the put and call option agreements over DPG's interest in
the German Joint Venture by one year. DPG's put option will now be
exercisable at any time on or after 1 January 2021, and DPE's call
option will be exercisable at any time on or after 1 January
2023.
1. The acquisition is to be effected by Daytona Germany GmbH, a
wholly-owned subsidiary of the German Joint Venture, and Domino's
Pizza Deutschland GmbH, another wholly-owned subsidiary of the
German Joint Venture.
2. Hallo Pizza financials for the year ended 31 December 2016.
Normalisation adjustments comprise the removal of expenses relating
to the vendor, other general and administrative costs which are
non-recurring in nature, and other items which differ under the
future ownership structure.
3. The German Joint Venture expects approximately 45 stores from
either the existing store network or Hallo Pizza to be consolidated
over time due to the proximity between stores in some locations
with existing German Joint Venture stores.
For further information, please contact:
For Domino's Pizza Group plc:
Peregrine Riviere
07909 907193
Maitland:
James Devas
020 7379 5151
This information is provided by RNS
The company news service from the London Stock Exchange
END
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