| Mon 21 Feb 2011, 8:00 | | FBR - Famous Brands Limited - Famous Brands` leisure strategy continues to |
|
FBR
FBR
FBR - Famous Brands Limited - Famous Brands` leisure strategy continues to
unfold with acquisition of Iconic Brands - Milky Lane and Juicy Lucy
FAMOUS BRANDS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1969/004875/06)
Share code: FBR
ISIN code: ZAE000053328
("Famous Brands")
FAMOUS BRANDS` LEISURE STRATEGY CONTINUES TO UNFOLD WITH ACQUISITION OF ICONIC
BRANDS - MILKY LANE AND JUICY LUCY
Johannesburg; Monday, 21 February 2011: Famous Brands (JSE share code: FBR)
has acquired the franchise agreements, trademarks and intellectual property of
Milky Lane and Juicy Lucy from Java Brands for R30,95 million. The acquisition
will be funded through a combination of existing cash reserves and short-term
debt, and will be earnings enhancing. The transaction is subject to
successful fulfilment of conditions precedent and is effective 01 March 2011.
Famous Brands` Chief Executive Officer, Kevin Hedderwick, comments, "The
acquisition of these iconic South African brands serves to further round off
our franchised food service leisure portfolio. The compelling purchase
consideration and synergies afforded by the integration of Milky Lane and
Juicy Lucy into the Group`s business model make this transaction an exciting,
low-risk one, which will deliver returns for shareholders from the outset."
Craig MacKenzie, Java Brands` Director, says, "This transaction heralds an
exciting phase in the life cycle of the much loved Milky Lane and Juicy Lucy
brands. The highly developed support infrastructure and the economies of
scale introduced to the business by Famous Brands are likely to add
significant value to the franchised partners. Both concepts are well
positioned to benefit from Famous Brands` proven formula for enhancing and
growing world-class brands."
MILKY LANE
Launched some 50 years ago by Famous Brands` founder George Halamandres, Milky
Lane is South Africa`s original soft-serve quick service / casual dining ice
cream concept, and one of very few brands in this category to have succeeded
where others have failed, including several global players. The business
consists of 96 franchised outlets.
Hedderwick says the rationale for the acquisition is comprehensive. "Milky
Lane is the soft-serve ice cream category leader, which aligns with the
Group`s strategy to grow its portfolio of best in class franchised leisure
brands. Furthermore, soft-serve is the fastest growing ice cream category in
the world at the moment, and continues to gain traction in South Africa too."
He notes, "As the emerged market continues to enter the mainstream economy,
driving growth in this category, there is an opportunity to extend the Milky
Lane footprint in terms of store numbers, through both the existing sit-down
as well as take-away trading formats, thereby improving accessibility to
prospective franchisees and mass market consumers."
Hedderwick comments, "Notwithstanding the emerged market opportunities, Milky
Lane`s product offering is one of South Africa`s best kept secrets but the
brand needs to be reawakened and re-communicated to South African consumers at
large. The menu and product innovation that currently exist for Milky Lane
are world-class, but consumer awareness thereof is negligible. This in itself
represents significant upside for existing store growth."
He adds, "Another key factor supporting this acquisition is that for a long
time we have been exploring dessert solutions for certain of our other brands
and hence we will be investigating the opportunity to extend the Milky Lane
brand and or parts of the Milky Lane intellectual property into a `store
within a store` concept across other parts of our network."
Hedderwick continues, "A significant driver surrounding this acquisition is
our ability to backward integrate the supply of soft-serve ice cream to the
existing Milky Lane network via our Baltimore Ice Cream plant which has the
spare capacity to take on this business. This additional manufactured volume
on its own is a compelling case to acquire the Milky Lane business and
significantly reduces the price : earnings hurdle rate."
JUICY LUCY
This brand, which has been in existence for 40 years, currently trades out of
18 franchised restaurants nationally. Hedderwick says, "Juicy Lucy pioneered
a niche in the health-centred convenience food category, and whilst the brand
has lost its way over time, the potential to restore this offering to its
former status is evident, more so given the current shift by consumers to
health-conscious eating."
"Juicy Lucy is a well-loved niche South African brand which affords us the
opportunity to fill a gap in our portfolio. We have for some time been
evaluating a range of specialist and stand-alone health food-focused type
brands and are happy that Juicy Lucy offers the Group entry into this
category."
Hedderwick concludes, "Our acquisitions aim to achieve several strategic
objectives: ensuring a synergistic fit with our business model and core
competence of food service franchising; the opportunity to be a leading player
in the categories in which we compete; and unlocking value for shareholders.
I am delighted that this transaction comprehensively meets those criteria."
ends
Notes to editors:
The Group`s brand portfolio includes Steers (490), Wimpy including UK (616),
Debonairs Pizza (279), FishAways (112), Mugg & Bean (109), tashas (7), House
of Coffees (17), Brazilian/Brazilian Cafe (51), Blacksteer (6), Giramundo (4),
KEG (26), McGinty`s (5), Vovo Telo (3) and O`Hagan`s (18). The Group also
manufactures and supplies its franchisees and the retail trade with a wide
range of meat, sauce, bakery, ice cream, fruit juice and mineral water
products.
For further information:
Kevin Hedderwick Del-Maree English
Chief Executive Officer Investor Communications
Famous Brands Ltd Mobile: 083 395 8608
Telephone: 011 651 5812
Famous Brands` website: www.famousbrands.co.za
Sponsor
Standard Bank
Date: 21/02/2011 08:00:01 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
