Restaurant Brands gets Yum sign-off for Hawaiian deal but delay dents guidance

Friday 3rd March 2017

Restaurant Brands New Zealand says it has gained approval from Yum! Brands, the parent company of Pizza Hut and Taco Bell, to acquire the only franchisee for those stores in Hawaii but the time taken for sign-off means full-year profit was at the lower end of guidance.

The fast-food retailer announced its conditional agreement to buy Pacific Island Restaurants (PIR), which has 82 Taco Bell and Pizza Hut stores, last October and had expected to complete the US$105 million deal by late December. But in early January it said disruptions over the Christmas/New Year period mean approval from franchisor Yum would take until the end of February.

Settlement is expected in the next two weeks, the Auckland-based company said in a statement. The delay means profit excluding non-trading items in the year ended Feb. 27 was at the lower end of the company's guidance of $30 million to $32 million, it said.

Restaurant Brands NZ raised $94 million in November last year to help fund the acquisition; $52 million from institutions and $42 million from retail investors, through the offer of one new share at $4.70 apiece for every 5.15 shares already owned.

The company is expanding into new markets to spread its risk and drive future earnings growth. In April 2016, it bought the biggest KFC franchisee in New South Wales, Australia.

Restaurant Brand shares last traded at $5.33 and have gained 30 percent in the past 12 months.

BusinessDesk.co.nz

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