Collins Foods, which also owns Sizzler, is buying 16 KFC restaurants in Amsterdam, the Hague, Almere and a number of cities in the south of the Netherlands for 62.3 million euros ($A87.8 million) from Yum! Brands.
“We are delighted with the strong level of support for the Placement shown by both Collins Foods’ existing shareholders as well as a number of new investors. The Netherlands Acquisition accelerates our European strategy following the recent German acquisition, providing critical scale and, via the Development Agreement, an exciting opportunity for the Company to deliver significant growth in this market,” Collins Foods CEO Graham Maxwell said.
The deal targets the rollout of 20 new KFC restaurants in the Netherlands by the end of 2021, wherein six are expected to be opened by the end of 2018. Maxwell said the Netherlands is a highly attractive market which has only 53 KFC restaurants, yet over 200 McDonald’s restaurants.
KFC executive Mark van ‘t Loo has been appointed boss of Collins Foods’ European business, which includes 11 German KFC restaurants bought in November for 12.7 million euros, and the one outlet that has since been opened.
Collins Foods said its underlying earnings were up 5.4 per cent to $30.7 million in the first 20 weeks of the second half of its fiscal year, on the back of a 12.3 per cent rise in revenue. Revenue from its Australian KFC restaurants rose 11 per cent, mostly attributed to the growth of its network to 192 outlets.
Revenue and earnings at Sizzler continue to fall due to restaurant closures, and Collins Foods said it is reviewing the carrying value of that business, as well as its Snag Stand stores and underperforming KFC restaurants.
The company has launched a $54.5 million capital raising to fund the Dutch deal, and its shares are in a trading halt at $5.88.
Collins Foods is also conducting a Share Purchase Plan (SPP) providing existing eligible shareholders in Australia and New Zealand the opportunity to invest up to a maximum of A$15,000 per shareholder to acquire additional the fast food shares at the Placement Price. The SPP will be capped at A$10 million, which means eligible shareholders may be subject to scale back.