Restaurant Brands announces Taco Bell rollout as Mexican takeover documents posted

Restaurant Brands NZ Ltd announced plans on Tuesday to roll out over 60 Taco Bell restaurants in Australia & New Zealand as directors said they would sell their shares to prospective new 75% owner of the listed company, Finaccess Capital SA de CV of Mexico.

Restaurant Brands already operates 36 Taco Bell outlets in Guam & Hawaii, and said on Tuesday it had reached agreement with Taco Bell Restaurants Asia Pte Ltd to bring the brand to New Zealand, New South Wales & Canberra next year.

Taco Bell Corp is a subsidiary of Yum! Brands Inc. Its Mexican-inspired quick service restaurants serve made-to-order & customisable meals.

The companies have reached development agreements to build the restaurants between 1 January 2019 & 30 June 2024, providing Restaurant Brands with the right of first offer in relation to the establishment of new Taco Bell restaurants in the 3 territories.

Restaurant Brands group chief executive Russel Creedy said these agreements weren’t conditional upon the completion of the current partial takeover offer.

He said the company expected to fund construction from internally generated cashflows. The Guam & Hawaiian outlets contributed $19.4 million to group earnings before interest, tax, depreciation & amortisation in the 2018 financial year. However, Mr Creedy said it would take several years for the brand to make a significant contribution from the Australian & New Zealand markets.

He added: “Bringing the Taco Bell brand to this part of the world aligns with our strategy of focusing on global tier one brands in markets we understand. We know from our experience in Hawaii & Guam that Taco Bell is a top tier brand backed by excellent franchise systems.”

Restaurant Brands is a corporate franchisee which specialises in managing multi-site branded food retail chains. It’s listed on the NZX & the ASX and has annual sales of about $740 million. As of November, it had 283 stores: 94 KFC MZ, 61 KFC Australia, 29 Pizza Hut NZ, 18 Carl’s Jr, 36 Taco Bell Hawaii, 45 Pizza Hut Hawaii. 

The takeover offer

Restaurant Brands’ board signed a pre-bid agreement with Finaccess Capital on 26 November for Finaccess subsidiary Global Valar SL to make a partial takeover offer to acquire up to 75% of Restaurant Brands’ shares at $9.45 cash/share.

Finaccess sent its offer document to Restaurant Brands on Monday, along with Restaurant Brands’ target company statement and an independent advisor’s report prepared by Grant Samuel Ltd.

Grant Samuel has assessed the value of Restaurant Brands shares at $8.15-8.92, including a premium for control. As the offer is above that valuation range, Restaurant Brands’ board unanimously recommended accepting it, in the absence of an unmatched superior proposal.

The biggest holding, 8.52%, is held by interests associated with Australian director Stephen Copulos, who’s agreed to accept the partial takeover for all those shares.

Grant Samuel said the offer price represented a 24.3% premium over the closing price of $7.60 on 17 October, the last day before Restaurant Brands announced Global Valar’s indicative proposal to make the offer, and a 23.1% premium over the New Zealand volume-weighted average price for the previous 6 months.

Links:
Offer document
Target company statement
Grupo FinAccess
Restaurant Brands

Earlier story:
30 October 2018: Updated: Restaurant Brands completes Starbucks sale, working on FinAccess offer

Attribution: Company release, offer documents.

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