US company Franchise Brands LLC plans to take an initial 10% shareholding in NZX-listed fast food chain BurgerFuel Worldwide [NZAX: BFW] subject to shareholder approval.
BurgerFuel shares surged 70c or 46.7% to $2.20 on news of the deal, which will provide the company with a $5.9 million cash injection.
The two companies have signed an agreement for the deal, which also gives Franchise Brands the option to increase its holding to 50% over eight years.
The US company was founded in 2005 with support of SUBWAY founders Fred DeLuca and Dr Peter Buck to invest in small to mid-market companies.
Under the agreement it is intended that Franchise Brands will offer franchise advice to BurgerFuel to help grow its business globally, including in the large US market.
The initial 10% stake will comprise a $5.9 million placement of new BurgerFuel shares and the purchase of $2.16 million of shares from Mason Roberts Holdings Limited (MRH), BurgerFuel’s current largest shareholder with a current holding of 80%.
The purchase price has been determined at $1.35 per share, the trading price when discussions were first initiated in April last year, BurgerFuel said in a statement to the NZX.
The deal will leave BurgerFuel with cash reserves of around $9-10 million.
An extraordinary general meeting will be held for shareholders to vote on the deal with a date to be set shortly.
BurgerFuel chairman Peter Brook says the deal is “extremely positive” for the future of BurgerFuel.
“It’s an incredible opportunity for the company and very exciting for all our shareholders. Bringing on board a strategic investor with major distribution, experience and unsurpassed global reach will drive significant value for BFW over the coming years. We are delighted for all of our shareholders.”
BurgerFuel chief executive Josef Roberts says it gives the company the “opportunity to turbo charge our business by going into the US and other countries, alongside the largest franchise company in the world.” BurgerFuel will retain control over its unique brand and operating style and will remain a publicly listed New Zealand company, he says.
BurgerFuel founding director Chris Mason says the company’s vision was always to develop the brand globally and build a big business.
“We’re only just getting started”.