Restaurant Brands buys Australia's second-largest KFC franchise

See also: Restaurant Brands’ shares jump to a high not seen since listing a decade ago

Restaurant Brands [NZX: RBD] is expanding its footprint across the Tasman, acquiring  Australia's second-largest KFC franchise for $A82.4 million.

The deal sees Restaurant Brands acquire all the shares in QSR Pty – the largest KFC franchisee in New South Wales – owned by Australian property developer Stephen Copulos.

A notice to the NZX this morning states QSR is a profitable operator with 42 stores, generating sales in excess of $A100 million and earnings before interest, tax, depreciation and amortisation of more than $A15 million a year.

The transaction will be settled through a combination of scrip and cash, and Restaurant Brands expects to have total debt of $82 million once the deal is completed. 

Restaurant Brands will issue five million new ordinary shares at $4.16 a share to Copulos Group interests as part of the settlement.

Copulos Group will own about 4.9% of Restaurant Brands as a result of the deal, which is subject to a 12-month escrow term during which they cannot be sold.

The transaction is expected to be earnings per share accretive for Restaurant Brands in the 2017 financial year.

The deal is subject to conditions, including approval from the franchisor Yum! Restaurants International.

Settlement is expected by the end of April, and Mr Copulos will join Restaurant Brands’ board.

Restaurant Brands chairman Ted van Arkel says the transaction is a strategic growth opportunity for the group.

“The acquisition is an opportunity for Restaurant Brands to gain a scale position in the New South Wales quick service restaurant market.”

The group sees “considerable” further expansion opportunities.

QSR has been a KFC franchisee for the past 17 years, with stores in urban Sydney and New South Wales regional locations.

Restaurant Brands, which operates the New Zealand franchise of KFC, Pizza Hut, Starbucks and burger chain Carl’s Jr, releases its full-year 2016 results on April 14.

KFC is its biggest earner, generating almost three-quarters of sales. 

The group released its third-quarter sales update in December, showing sales rose 9.4% to $88.7 million. 

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