RFG To Acquire Big Dad’s Franchise System

To provide additional scale and intellectual property expansion to the company’s retail food franchise system portfolio

Retail Food Group, an Australian retail food brand manager and franchisor, has reached agreement (subject to normal contractual terms and finalisation of due diligence enquiries) to acquire the Big Dad’s Pies franchise system.

This will bring the total number of acquisition transactions announced by the company in the past month to four. The company confirms that the acquisition is scheduled to complete prior to February 28, 2010 and consideration will be wholly funded from cash reserves with no requirement for a capital raising.

Tony Alford, CEO of Retail Food Group, said: “Big Dad’s Pies will be aligned to, and be developed under the umbrella of, the Brumby’s system and represents a further opportunity to add a successful, value accretive business capable of providing additional scale, revenues, synergies and intellectual property expansion to the company’s retail food franchise system portfolio.

“The acquisition will also enable RFG to avail itself of additional opportunities given the Big Dad’s Pies outlet network is principally situated in strip and other locations that differ from the predominant shopping centre environments of the company’s existing franchise systems. This opportunity is consistent with the company’s endeavours to proliferate its franchise systems in non-traditional site locations given the tempering of new shopping centre development and consequential reduction of prime site opportunities therein.”

On November 27, 2009, RFG advised that it had entered into conditional agreements to acquire the DCM Coffee & Donuts franchise system, the Brumby’s North Queensland and Brumby’s New Zealand master franchise territories.

The company had satisfactorily completed its due diligence inquiries so far as the DCM Coffee & Donuts franchise system was concerned, while due diligence investigations in respect of the Brumby’s North Queensland and Brumby’s New Zealand master franchise territory acquisitions continues.

The acquisition agreement with respect to DCM Coffee & Donuts is now unconditional and settlement is due to be effected on or before the 3rd week in January 2010.

Mr Alford added, “Whilst the four acquisitive transactions announced by the company over the past month are individually small, together they represent an immediate 2H10 EBIT contribution for RFG and importantly for the company, a further platform for additional scale and increased shareholder value.”