COLLINS FOODS CONTINUES TO GROW KFC PORTFOLIO

Written on the 19 May 2016

COLLINS FOODS CONTINUES TO GROW KFC PORTFOLIO

COLLINS Foods (ASX:CKF) is close to having 200 KFC restaurants under its belt, after acquiring a further 13 of the fast-food franchises in NSW and Victoria.

The fast food restaurant operator will pay $25.46 million for the new stores, while shares in the company rose around 8 per cent to $4.545 following the announcement.

"This acquisition further strengthens our growth platform as it provides a footprint from which Collins Foods can grow in NSW and Victoria," says Collins Foods managing director Graham Maxwell.

"The addition of the restaurants takes our count to 191 KFC restaurants across four states and one territory.

"Given Collins Foods' experience operating KFC restaurants in Australia, we expect to be able to drive synergies and margin improvement.  This acquisition, without factoring any margin improvement or synergies, will be immediately earnings per share accretive and enhance shareholder value."

The restaurants are being purchased from Chrikim Pty Ltd, Skeeter Wright Pty Ltd and Geoff Wright Corp Pty Ltd.

Geoff Wright of the Wright Group says he was pleased with the negation with Collins Foods.

"They are a quality company, and as we have known the management for over 20 years, we feel very confident in passing the running of our restaurants over to them.

As part of the transaction, Geoff Wright Corp will take a further $10 million equity investment in Collins Foods as part of the settlement package.

Completion of the acquisition is expected mid-July 2016.


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