Milton Keynes / UK. (dp) Domino´s Pizza UK and IRL PLC, the leading pizza delivery company in the United Kingdom and Ireland, announces the acquisition of 75 percent of Intergrowth Enterprises Limited, the master franchisee for Domino´s Pizza Germany. The other 25 percent will be retained by the vendor Briskas Limited, an affiliate of Grand City Hotels Group, the second largest hotel operator in Germany, with over 100 hotels in Europe.
Opportunity
The Company believes the German market offers an exceptional opportunity for the Domino´s brand. Domino´s Germany was awarded the master franchise in April 2010 and currently operates two stores in Berlin. While the total market size is yet to be determined, the Company aims to open at least 400 stores over the next ten years and believes that the market could ultimately accommodate more than double that figure.
Quick service restaurants in Germany are performing well and Germany´s strong economy and metropolitan based population make it an exceedingly attractive market for development. The Company believes the Domino´s focus on 30 minute delivery, supported by excellent product and online ordering capabilities, will satisfy the German demand for quality and convenience.
Domino´s Germany will be operated by a dedicated and experienced team to ensure the UK and Ireland management team remains focused on existing markets, while leveraging expertise in purchasing, commissaries, e-commerce and finance. In the short term, the stores will be run on a corporate basis while a franchisee model is put into place.
Terms of the Transaction
Under the terms of the Transaction, the Company has purchased a 75 percent interest in Domino´s Germany for a total consideration of 2’200’000 ordinary shares of 0,015625 GBP each. The Company will issue 1’320’000 Ordinary Shares on completion of the Transaction and a further 880’000 ordinary shares on the opening of the 35th Domino´s store in Germany. In addition to a share purchase agreement, a shareholders agreement has been entered into between the Company and Briskas to govern the operation of Domino´s Germany. In order to fund the development of the German business, the Company is providing Domino´s Germany with a 7,5 million EUR loan facility from the Company´s existing cash reserves, one million EUR of which will be drawn down immediately following completion. This is in addition to the 2,5 million EUR of loan capital already provided by Briskas.
Chris Moore, Chief Executive Officer: «This is a great opportunity for us to further increase the scale of our operation and develop our business in one of the largest economies in the world. The German pizza market represents a particularly fertile ground for Domino´s with a limited number of relatively small players and no established international pizza delivery brand. The German business will be headed up by Patricia Thomas, our former operations director, who took up a new role of international development director at the beginning of the year. She will be building a team to be based in Germany, drawn from the current German operation, strengthened with resources from the UK and others involved in Domino´s markets worldwide. The continued involvement of Grand City Hotels also brings considerable knowledge of the German market».
