South African convenience food company Famous Brands has concluded a transaction with listed King Consolidated Holdings to acquire its complement of 38 Bimbo’s franchise agreements linked specifically to Engen Petroleum Company forecourt sites. The intention is to convert these sites to Steers restaurants.
The deal is subject to the fulfilment of certain conditions precedent.
“The distinction is important — we are acquiring the franchise agreements related to the brand’s sites, as opposed to the brand itself. This acquisition enhances our core strategy of capitalising on the growing shift by consumers towards convenience, by ensuring that our brands are situated within arm’s reach of desire,” said Famous Brands chief operating officer Kevin Hedderwick.
“In the event that we can secure conversion agreements from the existing Bimbo’s/Engen franchisees by 15 January 2006, work will commence on converting these sites, an exercise which we hope to have completed by 1 July 2006,” he added.
Negotiations with existing Engen/Bimbo’s franchisees will start within the next few weeks.
Over and above the group’s minimum requirement of 26 convertible sites to Steers restaurants, any site not suitable for conversion to a Steers restaurant will be considered for conversion to one of Famous Brands’ other brands.
Alternatively Engen will consider converting to one of its in-house brands.
The Bimbo’s trademark will remain the property of King Consolidated Holdings, and will continue to trade outside of the Engen network.
“The upside of this transaction is twofold, the acquisition is obviously earnings enhancing, but equally, affords us access to major convenience sites which will extend the Steers brand footprint and Famous Brands’ convenience centred offering,” he said.
Famous Brands has 1Â 120 restaurants under franchise. The group’s brand portfolio comprises Steers, Wimpy, Debonairs Pizza, Fishaways, House of Coffees Coffee Shops, Brazilian Coffee Shops and Whistle Stop restaurants.
The group’s food-services division comprises Trufruit Juice company, Baltimore Ice Cream and Pouyoukas Foods.
On the JSE, the company’s share price was unchanged at 960 cents a share. ‒ I-Net Bridge