glasgowken wrote:I was amazed to find out Wimpys was still in business, I thought they had gone bust years ago.
FAMOUS BRANDS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1969/004875/06)
Share code: FBR ISIN code: ZAE000053328
(“Famous Brands” or the “company”)
FAMOUS BRANDS ACQUIRES WIMPY UK
Famous Brands has acquired a 75% stake in Wimpy UK, thereby achieving the group’s stated strategic intent to enter the first world branded QSR/Casual Dining market via acquisition. The remaining 25% shareholding is owned by Halifax Bank of Scotland. The acquisition consideration is UK £3 million, with a further UK £2 million to be invested in re-energising the brand. The business is currently funded via a debt structure of UK £9 million. The UK £5 million total investment will be funded through a combination of cash reserves and debt finance. The deal is conditional upon the Wimpy UK funding agreements becoming unconditional. Completion is targeted for the 5th March 2007.
Wimpy UK, which comprises 194 outlets across England, Scotland and Wales, and operates a further 20 restaurants under a master licence arrangement in Ireland, has a 50 year heritage, and is the largest independently owned franchised restaurant chain in the United Kingdom. The business owns the Wimpy trademark in 15 European countries.
Famous Brands’ Chief Operating Officer, Kevin Hedderwick, says: “This deal has been in the making for two years. It is the culmination of thorough research and diligent investigation and negotiation. We are delighted to announce a transaction of this nature which provides a strategic opportunity to consolidate the Wimpy brand and gain access to the UK market.”
He adds: “We have always maintained that the most prudent way to enter the first world market is through an existing brand because the onerous barriers to entry prohibit building a brand from start-up. The key to this acquisition is that Wimpy UK has a significant, established footprint, it is a brand we are intimate with, and it offers considerable upside potential.”
The group’s Wimpy Southern Africa network comprises 452 restaurants.
“Our intellectual property which has been developed and fine-tuned over many years in South Africa will be transferred to the UK operation. Wimpy UK has enjoyed iconic status in the past, and our task will be to restore it to that position by invigorating the brand and employing meaningful strategy to capitalise on its obvious prospects,” he elaborates.
Famous Brands Group Financial Director, Paris Papageorgiou, comments: “For an initial short term period the acquired business will not be earnings enhancing. Our investment will be aimed at reinvesting in the brand and exploiting the inherent potential therein. Key to obtaining Board approval to proceed with this transaction was the desire to protect our existing shareholders, which has been achieved through the financing structure agreed with Halifax Bank of Scotland.”
Director of Integrated Finance Asset Management at Halifax Bank of Scotland, Alan Ross, says: “HBoS is delighted to assist in Famous Brands' arrival in the UK. Having met Kevin Hedderwick and his colleagues we are looking forward to a long and fruitful partnership based on a solid foundation of experience, brand stewardship and a determination to succeed.”
NATURE OF THE BUSINESS OF WIMPY UK
Wimpy UK is a suburban, casual dining restaurant offering. The restaurant network includes representation on 25 Road Chef Motorway Service Areas (petroleum station forecourts), which are high-visibility multi-offering sites on transit routes, resembling the Engen-Wimpy alliance model in South Africa.
The business is a pure franchise model; it does not have manufacturing capacity and product for franchises is supplied by third party vendors.
RATIONALE FOR THE ACQUISITION
This acquisition rationale centres on a low risk / low cost strategy affording optimal entry into a first world economy. The acquired business aligns with Famous Brands’ strategic intent and core competencies, and the group’s South African intellectual property and experienced management will add significant value in revitalising the business.
Hedderwick says: “Historically the Wimpy trademark has been globally fragmented. This acquisition serves to unite trademark representation in Wimpy’s two major markets, South Africa and the UK. This unification will also position the brand for improved consistency and uniformity in future and enhance our global-brand aspirations.”
Wimpy UK is positioned in a growing market, which evinces the trends characteristic of the QSR industry globally: the increasing demand for convenience, the shift to out of home consumption and the evolution of casual dining as a way of life. It is estimated that the UK burger/chicken market will be valued at UK £4.2 billion in 2007.
Short term ambitions for Wimpy UK will be to re-engineer the business to align it more closely with the Wimpy SA model and offering. In this regard, the brand architecture and retail footprint will be overhauled and re-engineered to ensure a fresh, contemporary presence. From an operational perspective, opportunities exist in procurement centralisation and rationalisation.
Hedderwick comments: “Management’s immediate focus will be on consolidating and optimising the existing structure, and as such, we will proceed with caution regarding the opening of any new restaurants in the immediate short term. The same will apply regarding the roll-out of any of our other brands into the UK.”
Over the medium term the intention will be to explore opportunities to expand the Wimpy brand globally. Opportunities to export Famous Brands’ manufactured products to Wimpy UK will also be investigated.
The long term goal will be to use the Wimpy UK platform to launch a multiple brand offering for Famous Brands globally.
Darren Hele, Divisional Director: Franchising of Famous Brands, and formerly Wimpy SA Managing Director, will replace Wimpy UK’s incumbent CEO, John Davison. Hele was instrumental in reviving Wimpy SA over an eight year period and positioning it as a brand leader in the casual dining sector in South Africa. The business was subsequently acquired by Famous Brands in 2003. Hele will be based in London. The balance of the UK senior management structure will remain intact.
Hele comments: “The journey towards Wimpy becoming a global brand has long been a dream of mine and to be given this opportunity is extremely exciting. It is a challenge that I intend to relish. I am looking forward to the prospect of working with both the Wimpy UK team as well as our franchise partners, and am confident that our combined experience will benefit the operation.” More3/…
John Davison, outgoing Wimpy UK CEO, says: “Wimpy is a leading restaurant chain in Southern Africa with over 450 units, all franchised, as it is here in the UK. This transaction puts together a wealth of experience, which should create a very exciting future with great opportunities. Having been with Wimpy for 33 years I have enjoyed many commercial challenges with great support from everyone, especially our franchisees. I wish everyone success."
Wimpy SA’s business will operate independently from the UK operation, however both entities will benefit from shared intellectual capital, processes and new product development.
Some people hear voices.. Some see invisible people.. Others have no imagination whatsoever.