Retail Food Group (RFG), owner of Donut King, Michel’s Patisserie and Brumby’s Bakeries, has entered into an agreement to purchase Crust Gourmet Pizza Bars.
Crust was founded in Sydney in 2001 and has 119 stores, predominately in NSW and Victoria.
It also has international stores in New Zealand, Singapore, and the US.
The transaction follows RFG’s acquisition of the 118 outlet Pizza Capers Gourmet Kitchen brand system in April 2012 and will position the company as the market leader, both in terms of scale and menu offer, in the Australian gourmet pizza segment.
The majority of Pizza Caper stores are based in Queensland.
RFG CEO, Tony Alford, said, the purchase delivers on a number of strategic initiatives, the most important of which being the immediate scale provided by ownership of both the Crust and Pizza Capers brand systems, further investment within the QSR category, and reduced reliance on shopping centres for outlet growth.
“Whilst it remains RFG’s intent to develop each brand as distinct systems, the acquisition will generate unsurpassed opportunity for the exploitation of supply side economies, collaborative marketing, research and development activities, cross pollination of products and services and a growing expertise in the gourmet take away pizza market that will benefit all stakeholders in each system.
The price for the business will be the equivalent of 7x Crust FY13 adjusted EBIT and will be paid in two tranches $21 million cash and RFG ordinary shares to the value of $3m on settlement and 12 months after settlement an amount representing the difference between 7x Crust FY13 adjusted EBIT less the $24 million forming part of the purchase price paid in the initial tranche.
The second tranche of the purchase price will be paid in cash or cash and scrip at RFG’s election.
When combined, the Company’s present forecast is that Crust and Pizza Capers will contribute circa $7.5m to RFG FY13 EBIT.
Completion of the transaction is anticipated by the end of September 2012, however, remains subject to usual and ordinary conditions including completion of RFG’s due diligence enquiries.
Crust CEO, Michael Logos, will remain with the business post settlement and, together with co-founder and MD, Costa Anastasiadis, will continue to steer the business under the oversight of RFG national office.
“The transaction is the culmination of a six month engagement during which we have had the opportunity to familiarize ourselves with RFG management, culture and strategic objectives.
Having regard to those matters, the opportunity to partner with a growing public company with proven expertise in the retail food franchising industry offers our franchisees and other stakeholders early access to the benefits of a larger organization whilst retaining the core attributes that have generated the Crust Gourmet Pizza Bar success story to date”, he said.
RFG’s portfolio now includes Donut King, Michel’s Patisserie, Brumby’s Bakery, bb’s café, Pizza Capers Gourmet Kitchen, Crrust Gourmet Pizza Bars, and Esquires Coffee Houses.
It has a store network of more than 1350 outlets across eight countries.
