Burger King South Africa deal re-negotiated on lower enterprise value terms
Listed empowerment group Grand Parade Investments (GPI) has had to renegotiate the terms of its agreement to sell its interest in Burger King South Africa (BKSA) and Grand Foods Meat Plant (GFMP) to private equity group Emerging Capital Partners.
The decision to renegotiate the deal was owing to Covid-19 and the impact that the lockdown has had on the businesses.
Under the revised offer, the enterprise values are R570-million for BKSA and R23-million for GFMP, representing a 15% discount on the initial offer of R670-million for BKSA and R27-million for GFMP.
The deal has also been renegotiated on a cash basis with no earnings warranties, as opposed to the initial offer which was subject to an earnings warranty for the 2020 financial year.
GPI CEO Mohsin Tajbhai says that, although the offer is discounted compared with the initial offer, it is still fair given the additional risk and uncertainty caused by the pandemic.
The current deal equates to more than R1 a share in value to GPI shareholders and is in line with GPI’s strategy to unlock value through the controlled sale of assets. The conclusion of the sale will allow GPI to reduce gearing and return capital to shareholders through a special dividend.
Meanwhile, Emerging Capital MD Paul Maasdorp says the company’s ambition remains the same, to bring BKSA products closer to consumers and local communities in South Africa, while enabling the iconic brand to grow in terms of employment and product offering.
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