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Alhokair to acquire franchise rights of 10 brands by end-2019

Alhokair to acquire franchise rights of 10 brands by end-2019
The transaction will see an exchange of non-core receivables valued at SAR 340 million
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Riyadh – Mubasher:  Fawaz Abdulaziz Alhokair & Co., the leading fashion franchise retailer, plans to acquire franchise rights of 10 profitable international food and beverage brands from Food and Entertainment Company by the fourth quarter of 2019.

The transaction will see an exchange of non-core receivables valued at SAR 340 million with the current operator, according to Alhokair’s recent statement.

Under the deal, Food & Entertainment Company will be liable to compensate Fawaz Abdulaziz Alhokair & Co. if the financials of Innovative Union Company fall short of the established 2020 projections.

Moreover, the franchise operations of the 10 international food and beverage brands recorded an EBITDA value of SAR 54 million against revenue of SAR 354 million in FY2019.

Alhokair noted that the acquisitions come in line with the firm’s vision to create a stronger and more impactful “Shoppertainment” experience with over 10 F&B brands and 200 locations in Saudi Arabia.

Growth will be focused on targeted Quick Service Restaurant (QSR) businesses such as Cinnabon with high margins as such types of businesses can expand quickly with lower capital investment, and maintain a higher return on investment.

“This exciting transaction marks our company’s successful expansion into the food and beverage sector. The acquisition gives us a Kingdom-wide portfolio of strong brands that cover a wide range of tastes and products and fast-growing challenger brands with significant growth potential,” Marwan Moukarzel, CEO of Alhokair, commented.

The primary brands of this portfolio include Seattle’s Best Coffee, Cinnabon, Mama Bunz, and Molten Chocolate Café, while the remaining brands cater to the casual dining sector comprising Crêpe Affaire, Life with Cacao, Turkish coffee chain Kahve Dünyasi, Caffe Concerto, the restaurants Azal and Bluefin, and Sütiş.

“We are very excited about this first step, the future potential of F&B, and the value it will 2 bring for our customers. We are going to build on this to create new experiential opportunities for our customers,” Moukarzel added.

However, the completion of the transaction is subject to the completion of regulatory conditions applying to listed companies within the Kingdom.

On 5 August, Alhokair signed a purchase agreement under which it will acquire 100% of the share capital of Innovative Union Company, owned by Food and Entertainment Company.

The transaction is expected to generate additional value for Alhokair’s shareholders.