Veritas Investments, the shell company listed on the NZX after Salvus Strategic Investments was wound up, has agreed to buy the Mad Butcher franchisor business in a $40 million cash and scrip deal, and will seek more funding from the public early next year.
The NZX-listed firm will pay $20 million in cash and $20 million in Veritas shares in a deal that will made Mad Butcher owner Michael Morton the biggest shareholder in the company. Morton will remain chief executive of the Mad Butcher unit and join the Veritas board once it's completed.
Veritas plans to raise more capital in March next year from institutional and retail investors, alongside a shareholder and director warrant programme. The firm will also undertake a 30-for-1 share consolidation before the issue.
"Having looked at a number of businesses, the Mad Butcher is a stand out, and we are delighted to bring this company to the market through Veritas," chairman Mark Darrow said in a statement.
"It is a proven and iconic New Zealand business that has performed strongly over many years, but more importantly offers opportunities for growth."
The Mad Butcher franchisor business coordinates the national marketing and product procurement as well as providing support for the individual franchises around the country which collectively generate more than $150 million in annual sales.
The deal has secured debt financing commitments from ANZ, and includes an underwriting agreement from Craigs Investment Partners and sub-underwriting and other equity commitments from existing shareholders, including cornerstone investor Collins Asset Management.
The shares last traded at 6 cents apiece, valuing the company at just $3.4 million, less than a 10th of the Mad Butcher's sale price.