Domino's Pizza completes European purchase
4 July 2006
Australia’s Domino’s Pizza completes European purchase
Domino’s Pizza Australia New Zealand Ltd (DPANZ) has finalised its purchase of existing Domino’s Pizza operations in France, Belgium and the Netherlands from Domino’s Pizza Inc. on Monday, giving the Company its first foothold in Europe.
Announced in May this year, the purchase price was €8.9 million (AUD$14.8 million) with the contract specifying that a minimum of €10 million (AUD$16.7 million) be invested into an expansion plan.
The deal, which closed overnight, was fully funded from debt.
It comes as the Company today confirmed that it had 438 stores operating in Australia and New Zealand at 30 June 2006 – two more than forecast.
In recent months, key members of the DPANZ management team have relocated to Europe and have been working with local managers and franchisees to ensure a smooth transition for the European purchase.
plans to aggressively expand the European operation from the
155 stores, made up of 6 company-owned stores and 149 franchise stores.
Management estimates that its European markets have the potential to be in excess of 1,000 stores alone. As of 30 June 2006, there were 90 stores in France, 62 stores in the Netherlands and 3 stores in Belgium. The stores are mostly owned and operated by individual franchisees.
Domino’s Pizza Australia New Zealand Ltd CEO Don Meij said the Company had the skills, people and track record to significantly grow the underdeveloped European markets.
“With the transaction now complete, we are focused on using our experience and successful Australian and New Zealand business model to profitably grow the European market,” he said.
“In recent months, our Australian leaders have been working with key members of the existing European management team to develop a growth strategy. This strategy will now be implemented and will involve opening new stores, bolstering same store sales, and improving margins through operational efficiencies and better buying power.”
Domino’s Pizza Australia New Zealand Ltd has experience expanding into new markets – it successfully entered New Zealand in 2003. The current management team has been adding approximately 50 new stores a year to its network since 2001.
Management reported that it expects the expansion to have no effect on the current growth, plans or day-to-day core operations for the Australia New Zealand business.
Management expects the European acquisition to allow the Company to maintain a higher EPS growth rate for the foreseeable future from 2008 than previously possible with the Australia New Zealand business on a standalone basis.
The existing Australia New Zealand business (on a standalone basis) remains on target to increase EPS by approximately 15% in the 2007 financial year. As a result of the acquisition, consolidated EPS for the 2007 financial year is expected to be approximately 5% below DPANZ’s EPS for the 2006 financial year. From 2008 and beyond, the European acquisition is expected to bolster EPS.
Domino’s Pizza Australia New Zealand Ltd and its franchisees operate 438 stores across Australia and New Zealand, employing more than 11,000 casual and full-time staff and making more than 40 million pizzas each year.
Domino’s Pizza (DMP) is Australia’s first
publicly-listed pizza chain, making its debut on
Australian Stock Exchange in May 2005.