Fawaz Alhokair announces strategic acquisition of 10 F&B brands

Fashion franchise retailer, Fawaz Abdulaziz Alhokair & Co., has announced that it will acquire the Saudi rights for ten international food and beverage (F&B) brands from Food and Entertainment Company Ltd.

The deal will see an exchange of non-core receivables valued at SAR 340 million with the current operator, the listed firm said in a statement.

Fawaz Abdulaziz Al Hokair & Co. will not make any cash payment for the transaction. 

The agreement requires that Food & Entertainment Company Ltd. will be liable to compensate Fawaz Abdulaziz Alhokair & Co. if the financials of Innovative Union Company fall short of the established 2020 projections.

Fawaz Abdulaziz Alhokair & Co. has already signed an agreement to fully acquire Innovative Union Company, owned by Food and Entertainment Company, for SAR 340 million.

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

The primary brands of this portfolio which make up the bulk of locations within the acquisition consist of Seattle’s Best Coffee, Cinnabon, Mama Bunz, and Molten Chocolate Café.

The remaining brands cater to the casual dining sector, including Crêpe Affaire, Life with Cacao, Turkish coffee chain Kahve Dünyasi, Caffe Concerto, the restaurants Azal and Bluefin, and Sütiş.

The company noted in the statement that growth will be focused on targeted Quick Service Restaurant (QSR) businesses such as Cinnabon with high margins.

“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,” CEO Marwan Moukarzel said.

Global F&B expert Peter King recently joined as CEO of Food for Innovation Union Company to help steer the operational transition to Fawaz Abdulaziz Alhokair & Co. and streamline the integration of the two brand powerhouses.

“Our expansion plan over the next five years is an ambitious approach to F&B in KSA. The acquisition offers scalability and better access to resources, with all the benefits of being part of a public company,” King commented on the acquisition.

“The evolution in our strategy at this stage is geared towards the QSR businesses. This will allow us to expand quickly, lower capital investment, and maintain a higher return on investment,” he added.

The completion of the transaction is subject to the completion of regulatory conditions applying to listed companies within the Kingdom and is expected in a few months’ time, to be completed latest by Q4 2019.