Quick service restaurant (QSR) group, Simbisa Brands Limited is looking to expand its business with the proposed acquisition of Foodfund Investments.
Foodfund is a family owned business incorporated in the United Arab Emirates, the British Virgin Islands and South Africa with several restaurants across the globe.
In light of this, Simbisa will seek shareholder approval for the 100 percent acquisition of Foodfund at an extra ordinary general meeting (EGM) to be held on March 9, 2018. At the same EGM, Simbisa will also seek approval for the secondary listing of its shares on the London Stock Exchange.
“At a meeting held on July 21, 2017, the board of directors of Simbisa considered and identified a potential opportunity for the acquisition of Foodfund. It was undertaken to conclude the transaction in lieu of its shares,” said Simbisa.
According to a circular to shareholders, the negotiated value of the transaction at the effective date of the acquisition, that is July 1, 2018, is to be settled via staggered issuance of up to 198 million Simbisa ordinary shares that are to be listed on London Stock Exchange’s Alternative Investment Market (AIM).
Foodfund’s portfolio currently includes 17 restaurants operating under eight independent food and beverages brands in Europe, Middle East, South Africa and the United Kingdom. In the year to June 30, 2017, the firm achieved a revenue of AED150 million and a profit after tax of AED7,9 million.
The issuance of these new shares will involve an initial issue of 127 million Simbisa ordinary shares on the effective date of the Foodfund acquisition.
Up to 47 million Foodfund performance based earn out shares will be issued if the firm achieves a cumulative profit after tax above the earnings target of $9,953 million and up to $ $13,635 million pro-rata basis of 12,834 Simbisa new shares for every dollar profit after tax generated above the earnings target and for the Foodfund financial years ending June 30 2019 to June 30, 2021.
The issuance also entails that additional Foodfund performance based earn-out shares will be issued on the pro rata basis of 4,71 Simbisa new shares for every $1 profit after tax generated above the cumulative after tax profit of $13 million, capped to a total amount of 23 million Simbisa new shares.
Since it was spun off from parent company — Innscor — in November 2015, Simbisa has been on a growth trajectory, adding more counters both in Zimbabwe and across the region where it has a presence.
In July last year, Simbisa announced its intention for a secondary listing of its ordinary share capital on the London Stock Exchange AIM for its expansion. The listing is expected to create access to equity financing from international markets and a wider pool of funding including competitively priced debt funding.
“The shareholders gain the prospect of holding shares in an enlarged and geographical diversified group with greater prospects. Diversifying and growing operations regionally and internationally is also key to managing Simbisa’s revenue concentration risk,” said Simbisa.
Zimbabwe is the group’s largest market. Although the trading conditions in Zimbabwe have been challenging and expected to remain challenging in the short term, the improved transactional convenience in the market is expected to create room for Simbisa’s further growth in the financial year 2018.