Domino’s pays $42m to buy out Japan stake
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Domino’s Pizza is taking full ownership of its Japanese joint venture by buying out partner Bain Capital’s minority stake for $42 million.
Domino’s, which in May announced Bain’s intention to exit, on Monday said it would pay less than the $46.4 million it set aside for the deal in its full-year accounts.
The purchase will be funded by a combination of cash and existing debt facilities, and is expected to be completed by Friday.
Domino’s said the transaction will be earnings per share accretive in the current financial year, which started on July 3.
The deal is the second in less than a week for Domino’s.
Last week, the company continued its European expansion with the 32 million euro (A$48.1 million) acquisition of German chain Hallo Pizza.
The cost of integrating the 170 stores into Domino’s Pizza Deutschland, which is majority owned by Domino’s Pizza, will bring the ASX-listed company’s net spend on the deal to between $A52.6 million and $A63.1 million.
That transaction will only have a small positive contribution to Domino’s FY18 underlying earnings because it won’t complete until early in the 2018 calendar year.
Earlier this month, the pizza chain said it had returned $5.4 million in underpaid wages and superannuation to its employees over the past four years under a national audit of its stores that is due to wrap up in December.
Questions & Answers
Q.What is the primary reason Domino’s is paying $42 million?
What is the primary reason Domino’s is paying $42 million?
Domino’s is buying out Bain Capital’s minority stake in their Japanese joint venture. This move will give Domino's full ownership of its operations in Japan, consolidating its control over the market there.
Q.How will Domino’s fund this acquisition?
How will Domino’s fund this acquisition?
The company plans to fund the acquisition using a combination of its existing cash reserves and available debt facilities. The transaction is expected to be finalised by the end of the current week.
Q.How will this deal financially impact Domino’s in the current financial year?
How will this deal financially impact Domino’s in the current financial year?
The transaction is anticipated to be earnings per share accretive in the current financial year, which began on July 3. This indicates a positive contribution to profitability.
Q.Has Domino’s made any other significant acquisitions recently?
Has Domino’s made any other significant acquisitions recently?
Yes, last week Domino’s acquired German chain Hallo Pizza for 32 million euro, which involved integrating 170 stores. This was part of its ongoing European expansion strategy.
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