The purchase price of R66m includes all assets of the business including stock, trade debtors, the distribution centre and any payments paid in advance to secure new stores still to be opened.
“The seller is warranting that there will be at least 195 stores on the takeover date” said Carlo Gonzaga, CEO Taste Holdings, “and gross profits of at least R2,4m per month. This will translate into annualised system-wide-sales in excess of R300m. Should this not be achieved then the purchase price will be reduced by R35 for every R1 below the profit target.” Gonzaga added that “for every store less than 195, R450k will be deducted from the purchase price.”
Fast growing sector
“We are excited at this acquisition as fish is the fourth largest fast-food category and has shown considerable growth in the last five years and exposes Taste to the lower LSM segment,” said Gonzaga. “There is significant opportunity for growth and we believe that the chain is potentially a 400-store system in current store formats. The current footprint does not include any meaningful penetration into the largely untapped Western Cape and KwaZulu-Natal provinces which presents Taste with the massive opportunity to expand into these coastal areas.”
The acquisition will increase the number of outlets in the Taste food division by over 40% and the annualised system-wide-sales in that division to in excess of R800m and is expected to be earnings enhancing from the first year of consolidation.