Jubilant FoodWorks Ltd.’s Netherlands-based subsidiary plans to boost its stake in DP Eurasia by acquiring up to a 51.16% stake in Turkey’s largest pizza delivery company for about 73.36 million euros ($80 million) cash.
The unit Jubilant Foodworks Netherlands (JFN) currently owns a 48.84% stake in DP Eurasia, the Indian foodservice company said in a stock exchange announcement.
JFN plans to acquire the entire issued and outstanding ordinary share capital of DP Eurasia not already held by the company at a price of up to 85 pence (0.97 euro) per share from existing shareholders of the London Stock Exchange-listed company.
The offer price represents a premium of about 24.1% to DP Eurasia’s closing share price of 68.5 pence per share on 27 November.
Why Boosting Stake?
Jubilant FoodWorks, which operates Domino's restaurants in India, said its board has approved the proposed investment.
“The company has been and will be able to leverage its experience as India's largest foodservice company to assist DP Eurasia with its growth plans so that it can achieve its potential,” it added.
DP Eurasia is the exclusive master franchisee of the Domino’s Pizza brand in Turkey, Azerbaijan and Georgia, according to the statement. The group offers pizza delivery and takeaway/eat-in facilities at its 694 stores (678 in Turkey, 10 in Azerbaijan and 6 in Georgia as of 31 October 2023), and operates an asset-light business through franchised stores, contributing to 88% of the overall stores.
In addition to pizza business, the group also has its own coffee brand, COFFY, which trades from 67 stores, 78% of which are franchised.
Jubilant FoodWorks, a part of the Jubilant Bhartia Group, said the proposed acquisition will also enable JFN to benefit from a greater share of future value upside.
Funding Intricacies
To fund the acquisition, JFN will use the existing term loan facility from HSBC and also avail a new long-term facility from HSBC.
Jubilant FoodWorks said it will issue a corporate guarantee of up to 60 million euros to HSBC for the repayment obligations of JFN. The corporate guarantee will remain valid until full repayment of loan or until two years 11 months from the date of first drawdown, whichever is earlier.
The new guarantee will be in addition to the existing guarantee amounting to 45.89 million euros issued by the company for securing the repayment obligations of existing term loan facility availed by JFN from HSBC.
The transaction, in case of an open offer, is likely to conclude in about 90 days.
Note: $1 = 0.91368 euro
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