Restaurant Brands NZ to receive full takeover offer from Finaccess at $5.05 a share

Restaurant Brands has received a takeover offer from its largest shareholder at $5.05 per share. Graphic / NZME

Mexican company Finaccess Restauracion plans to make a full takeover offer for KFC and Pizza Hut operator Restaurant Brands New Zealand.

Finaccess currently owns around 75% of the NZX-listed fast food business.

The $5.05 per share offer to acquire the remaining 25% of the business is worth roughly $157.5 million.

The offer would represent a 70.6% premium on the business’ Monday closing price of $2.96.

Following the announcement, the company’s share price on the NZX rose 65.54% or $1.94 to $4.90.

Finaccess Restauracion SL (Finaccess) has already received support for the offer from ACC, which owns 4.727% through a lock-up deal.

Jose Pares Gutierrez is Finaccess’ current chief executive, and is also chairman for Restaurant Brands New Zealand.

Finaccess completed a partial takeover in 2019 under its previous name Global Valar SL for $881m.

Finaccess was forced to scale its $9.45 a share offer, a 24% premium at the time, after acceptances exceeded its 75% upper limit.

Gutierrez said at the time that keeping minority shareholders meant the business would continue to have market discipline.

“When you learn how to walk you can be tempted to run but most likely you are going to fall down because you are trying to go too fast,” Gutierrez said.

“What we like about Restaurant Brands is they like to move, but in a solid, steady way and that’s exactly the same philosophy that we have.”

He said the reason Finaccess didn’t go for the whole company was because the firm liked its long-term investments to remain listed.

The takeover offer comes after the business’ share price has plummeted.

In August 2021 the business’ share price sat at a high of roughly $16, and has since dropped by around 75%.

Restaurant Brands chariman Jose Pares Gutierrez said during his company's previous takeover offer in 2018 that keeping minority shareholders meant the business would continue to have market discipline.

Background

The company operates popular fast food chains KFC, Taco Bell, Carl’s Junior and Pizza Hut, and has operations that run in Australia and two US States, California and Hawaii.

In its latest financial result, group sales grew 2.3% to $703.2m in the six months to June 30, while net profit after tax (npat) dipped 5.6% to $11.9m compared with the prior comparable period.

Group store earnings before interest, taxes, depreciation and amortisation (ebitda) as a percentage of sales, known as ebitda margin, fell to 12.9% from 13.8%.

Sales in the company’s largest and historically most successful market, New Zealand, were flat at $309.7m.

Both of the firm’s United States markets, Hawaii and California, reported respective same-store sales gains of 5.5% and 1.9%.

Store ebitda in California fell 34.6% to US$1.7m ($2.91m). A 29% minimum wage increase in the state was cited as a catalyst for the contraction.

Shareholders at the company’s annual meeting in May criticised the company’s decision to operate in California and suggested it leave the market.

Restaurant Brands had 522 stores at year’s end, including 156 in New Zealand, 83 in Australia, 70 in Hawaii and 71 in California. In New Zealand, 137 of the 143 Pizza Hut outlets are run by franchisees.

Tom Raynel is a multimedia business journalist for the Herald, covering small business, retail and tourism.