Good Spirits Hospitality plans to buy Nourish Group for $27.2 million, creating one of New Zealand's largest hospitality operators.
Listed Good Spirits Hospitality (GSH) will buy 10 venues including Auckland's Soul Bar & Bistro and will bring GSH's total venues to 20. The deal is happening as the restaurant sector faces the unprecedented challenges of Covid-19 lockdowns, especially in Auckland, and new dining rules that will come in with the "traffic light" system.
Last month one Nourish Group restaurant, Euro, announced it would close, blaming the impact of the pandemic.
The acquisition will more than double the size and earnings of GSH and "allow significant financial and operational synergies" across the combined group along with an important platform for growth.
Nourish Group owns 10 hospitality venues throughout New Zealand including Soul Bar in Auckland's Viaduct Basin, Talulah, The Chamberlain, The Brit, Andiamo, Shed 5, The Crab Shack (Wellington), Pravda Café and Grill, Jervois Steak House (Auckland and Queenstown) and also provides advisory services to Bistro Lago.
GSH venues include Danny Doolans and The Cav.
The combined group says it will be well-placed for further growth with several proven repeatable concepts and brands which can be rolled out further around New Zealand and abroad.
Once complete, GSH will employ more than 450 people.
"This is a transformational growth opportunity for GSH," says company chairman Duncan Makeig.
"We are excited about the opportunity to leverage Nourish Group's industry-leading expertise in the restaurant and social dining segments. The combined group will provide a platform for further growth and innovation. This is just the start of an exciting journey together."
The base purchase price is $21.3m cash (on a debt free/cash free basis) with up to an additional $5.9m payable 12 to 24 months after settlement through an agreed earnout formula based on venue outperformance.
The full purchase price will be funded through a combination of cash, new debt and the balance through equity placement and the overall transaction will lower GSH's current debt gearing ratio.
Industry veteran, Nourish Group's founder Richard Sigley, will join the GSH board and executive.
Throughout the past two decades, the Nourish Group has cemented its position as the benchmark for hospitality businesses in New Zealand, winning several Lewisham Awards for excellence in the industry with its institutional, long-standing establishments.
"GSH is delighted for the staff in both companies and is committed to being the employer of choice in the on-premise hospitality sector," said Geoff Tuttle, chief executive of GSH.
"Both GSH and Nourish have dedicated, strong teams of talented hospitality professionals. A united team with a shared purpose and values will see us continue to deliver excellent service and memorable experiences to our local communities. We also each hold a number of long-standing, trusted partnerships with suppliers and industry players that we look forward to jointly leveraging with our new scale and geographic reach."
The owners of Nourish Group will retain The Crab Shack (Auckland).
Completion of the acquisition is subject to several conditions including:
• GSH's shareholder approvals, which will be sought at a special shareholder's meeting anticipated to be held in the first quarter of 2022;
• GSH's financier consenting to the overall transaction and GSH entering new financing arrangements;
• GSH obtaining satisfactory financing (debt and equity) to fund the payment of the purchase price and landlord, key supplier and other stakeholder consents being obtained to ensure the continuation of the day-to-day operation of the business.