Cooks Global Foods to buy Mojo for $19M, chase North American growth
By Paul McBeth
Aug. 15 (BusinessDesk) - Cooks Global Foods will buy Mojo Coffee Cartel for $19 million and support the well-known Wellington chain's US expansion plans.
Auckland-based Cooks will pay $11.7 million in cash, $2 million in shares and take on $5.3 million of debt to acquire Mojo, which operates 36 cafes in Auckland and Wellington, a cafe in Chicago, Illinois, and licenses four stores in Japan and two in China. The deal relies on Cooks raising enough money to fund the cash component, and Mojo securing a lease variation and completing acceptable March 2018 accounts.
Cooks chair Keith Jackson said the acquisition will boost the company's earnings and market capitalisation and help accelerate its shift from NZX's Alternative Market to the main board.
"This, coupled with Cooks' well-signalled plan to move to the NZX main board have the potential to increase our market liquidity and broaden the company's investor base," Jackson said. "We are working hard to bring this transaction to fruition and are looking forward to Mojo joining the Cooks family of brands."
Cooks is the master franchise rights holder for the Esquires Coffee chain outside of New Zealand and Australia.It also owns Scarborough Fair tea and Grounded Coffee.
Mojo co-founder Steve Gianoutsos told BusinessDesk the transaction is firmly focused on fulfilling the company's next stage of growth. Mojo's store, pantry and roastery in Chicago have been well-received, and he will drive the larger group's ambitions to develop the North American market, which Cooks has yet to tap through its Esquires brand.
Gianoutsos said the benefits of the tie-up would see Mojo and Cooks able to share expertise, while a bigger listed company would have readier access to capital to fund expansion. Retaining talented people is also key in hospitality, and the wider international footprint offers greater opportunities for staff development, he said.
Cooks was interested in pursuing a deal two-and-a-half years ago, but Gianoutsos said the timing wasn't right.
"It's around timing and how the opportunity presents itself," he said. "When you put the two companies together it helps them get on to the main board, which makes it a lot easier to raise capital to roll out stores just about anywhere."
Mojo has largely funded expansion organically during its 15-year lifespan and turned to private equity two or three years ago when it launched the Chicago beachhead, he said. The strategy to grow the North American business is still being developed, but Gianoutsos said Chicago shared a lot of similarities with Mojo's home base of Wellington.
The company is profitable and employs 255 staff, serving 50,000 to 70,000 cups of coffee a week. At $4 a cup, coffee alone would generate sales of between $10.4 million and $14.6 million.
Cooks will retain the Mojo brand and its people, with Gianoutsos, Katy Ellis and John Holloway joining the group's senior management.
The company's shares last traded at 7.5 cents, valuing it at $36.7 million.