Leading owner, operator and developer of franchises Allied Brands Limited (ABQ) today announced it had entered into a binding heads of agreement to acquire the business of Villa & Hut (VH). The heads of agreement is subject to completion of legal and financial due diligence but is binding on the vendors. Due diligence has been conducted over the last 4 weeks and is due to be completed by 4 June 2009 with settlement expected to be completed prior to 30th June 2009.
VH was established in 1999 as an integrated homeware and cafe brand. It was founded on eco-friendly, sustainable, organic and fair trade principles. All products offered by the businesses adhere to these principles. The Kafe business includes 6 outlets spread through the Adelaide, Melbourne and Hobart airports (operated under franchise to Delaware North Ltd) as well as 10 additional outlets in shopping centres and DFO outlets, some in conjunction with VH homeware outlets.
The business of VH will be seamlessly integrated into ABQ’s existing franchised food operations sharing many similar products and requiring similar franchise operational and marketing skills. Whilst the brands will continue to present an independent retail presence, the Allied Brands coffee roasting facility at Mt Kuring-Gai will, post acquisition, assume the production of the 32 tonnes of coffee used by VH as well as a proportion of the remaining food offering at the Kafes. Allied Brands will continue the founder’s principles and provide eco friendly sustainable organic fair-trade coffee. This will double the coffee production of the group without increasing overheads.
The VH business is forecast to earn NPBT of around $1.5m in the 2009-2010. Allied Brands managing director Peter Graham said the acquisition of Villa & Hut was consistent with Allied Brands continuing strategy of pursuing acquisitions that have strong five-year growth potential, have readily identifiable synergies with the company’s other brands, and provide value for shareholders.
To fund the acquisition ABL advises that it has arranged a share placement to sophisticated investors of up to $2.0m at 15c per share. Later this week, subject to the approval of the ASX, an offer will be made to existing shareholders to acquire up to $10,000 of shares per shareholder at 15c per share through a shareholder share purchase plan being announced.
The share placement and the shareholders share offer are designed to ensure adequate capital is available for the VH acquisition and for the company’s future working capital needs.
Additionally, CEO Shane Radbone is acquiring 5.0m fully paid ordinary shares in ABQ at a price of 15c per share. This purchase will be facilitated by the company through an executive loan on commercial terms. The issue of these shares will be subject to shareholder approval at the forthcoming EGM.
http://www.alliedbrands.com.au/
