$40m deal for meat seller

Founder Peter Leitch will remain the Mad Butcher's brand ambassador after the sale. Photo / Martin Sykes

Veritas Investments has expansion plans for well-known retailing franchise.

Veritas Investments chairman Mark Darrow says many opportunities exist for expanding the Mad Butcher retail chain.

The company, formed late last year through a backdoor listing on the NZX, has signed an agreement to acquire the franchisor meat retailing business for $40 million from owner Michael Morton, who bought the company off founder Sir Peter Leitch in 2007.

Veritas, which plans to come to the market for a capital raising next year, will pay for the transaction with $20 million in cash and $20 million in Veritas shares.

Morton will remain chief executive of the Mad Butcher and become a director, and the largest shareholder, of Veritas following completion of the transaction, which is subject to shareholder and regulatory approvals.

Veritas' other directors include former Bendon chief executive Stefan Preston, Shane McKillen, one of the founding shareholders of 42 Below vodka, and Tim Cook, managing director of Collins Asset Management and a former director of juice maker Charlie's.

The company said it had funding arrangements in place, incorporating an underwriting agreement from Craigs Investment Partners, backed by sub-underwriting and other agreements from existing investors including Auckland-based private equity firm Collins Asset Management, its cornerstone shareholder.

Darrow said Veritas, which took over the shell left on the NZX after the winding up of Salvus Strategic Investments, was attracted to the Mad Butcher because it was an iconic and profitable brand.

"Part of its beauty is its simplicity," he said. "There's room for a lot of growth - it just ticked all the boxes."

Darrow said the capital raising, expected to take place in March, aimed to broaden Veritas' shareholder base to include retail investors, as well as help fund the Mad Butcher purchase.

The exact numbers on the amount the company aimed to raise through the offer would be released in the offer documents.

A 30:1 share consolidation would take place before the offer, Veritas said.

Leitch, who will remain the Mad Butcher's brand ambassador post-acquisition, said he didn't see any reason why Veritas would not continue his legacy with the business.

"I think there's room for [the business] to expand. It's a rock solid brand."

Morton said the acquisition provided the "ideal next step" for the Mad Butcher to grow and realise its full potential.

Veritas shares closed up 1c to 7c last night.

The Mad Butcher

• Founded by Sir Peter Leitch in 1976.
• Currently 36 stores operated by franchisees.
• Combined annual sales in excess of $150 million.