Wrap Text
Acquires 51% of Retail Group (Pty) Ltd, Botswana
FAMOUS BRANDS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1969/004875/06)
JSE Share code: FBR ISIN code: ZAE000053328
(“Famous Brands” or “the Company”)
FAMOUS BRANDS ACQUIRES 51% OF RETAIL GROUP (PTY) LTD, BOTSWANA
LAUNCHING NEW ERA IN GROWTH STRATEGY
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.”
Famous Brands acquires 51% of Retail Group (Pty) Ltd, Botswana - Launching new era In
growth strategy
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.”
For further information:
Kevin Hedderwick Julian Gwillim
Group Chief Executive, Famous Brands Aprio
Telephone: 011 651 5812 Mobile: 082 452 4389
Midrand
23 June 2015
Sponsor:
The Standard Bank of South Africa Limited
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