The aggressive Retail Food Group (RFG) continues to expand deeper into our cafe and coffee culture, this time buying control of Brisbane-based Di Bella coffee, a month after it grabbed control of Gloria Jean’s here and around the world.
The deal means that in the space of a month, RFG will have spent just on $200 million, with millions more committed for later years, on buying a substantial stake in the coffee and cafe retailing and supply sector here, and offshore (through the Gloria Jeans deal).
RFG announced the latest deal, to cost an initial $30 million, at yesterday’s annual meeting. That will consist of $27.4 million in cash and $2.6 million of RFG shares.
A further payment of $17 million is contingent on certain performance milestones being met by Di Bella over the next three financial years.
Founder Philip Di Bella joins RFG and will be in charge of its growing coffee business – which will be boosted 30% by the purchase (including Gloria Jeans) to around 5.8 million kilos a year according to company figures.
The news was liked by investors and saw RFG shares rise 0.8% to $5.93 on a day when the wider market was again sold off heavily.
RFG YTD – Another coffee chain for Retail Food Group
RFG’s CEO Tony Alford said, “(Di Bella) complements and extends the company’s existing market penetration by providing the group with a reputable specialist coffee brand well known within wholesale and retail coffee channels," he told shareholders at Tuesday’s annual general meeting.
“Di Bella Coffee and Gloria Jean’s Coffees Group will be simultaneously integrated into RFG by a dedicated alignment and integration team,” he told the meeting.
Mr Alford said the group was confident of meeting its target of a 18.5% lift in underlying net profit to $43.7 million for this financial year.
And if the Gloria Jean’s acquisition is settled on schedule, the group expects underlying net profit will be $50 million, up 36% on 2013-14’s record profit of $36.9 million.
RFG said that Di Bella would add $2 million a year to the company earnings before interest and tax in the 2015 financial year and $6 million the following year.
RFG raised $40 million in a placement in late October to help fund the Gloria Jeans purchase.
Mr Alford also said it was regrettable the group had to end the planned purchase of Italian food franchise La Porchetta after its due diligence investigations.
“RFG continues to engage with the La Porchetta vendors regarding those matters identified during the due diligence process, and in circumstances where a transaction is ultimately enlivened, the market will be immediately informed," he said.
Also at yesterday’s AGM, RFG executives said they had no interest in buying the Pie Face chain (seller of upmarket meat pies) which entered voluntary administration earlier this week.
RFG owns the Donut King, Brumby’s Bakery, Michel’s Patisserie, bb’s café, Esquires, The Coffee Guy, Café2U, Pizza Capers Gourmet Kitchen and Crust Gourmet Pizza franchise systems.
In addition, the company is a significant wholesale coffee roaster supplying existing Brand Systems and third party accounts under the Evolution Coffee Roasters Group, Caffe Coffee, Roasted Addiqtion and Barista’s Choice coffee brands.
Now it will add Gloria Jeans and Di Bella to this growing roster of brands straddling the cafe and takeoway food sector – with much of its products on caffeine and carbohydrates.
