Veritas buys Mad Butcher for $40M, flags public offer next year

Michael Morton remains CEO and will join Veritas board

Veritas Investments has agreed to buy the country's iconic Mad Butcher business in a $40 million cash and scrip deal, and will raise more funding from the public early next year.

The NZX-listed firm will pay $20 million in cash and $20 million in Veritas shares in a deal that will made Mad Butcher owner Michael Morton the biggest shareholder in the company.

Morton, who bought the retail butchery franchisor off founder Sir Peter Leitch in 2007, will remain chief executive of the Mad Butcher unit and join the Veritas board once the deal is completed.

Veritas, which listed on the NZX in 2011 after Salvus Strategic Investments was wound up,  plans to raise more capital in March next year from institutional and retail investors, alongside a shareholder and director warrant programme.

The firm will also undertake a 30-for-1 share consolidation before the issue.

"Having looked at a number of businesses, the Mad Butcher is a stand out, and we are delighted to bring this company to the market through Veritas," chairman Mark Darrow says in a statement.

"It is a proven and iconic New Zealand business that has performed strongly over many years, but more importantly offers opportunities for growth."

The Mad Butcher franchisor business coordinates the national marketing and product procurement as well as providing support for the individual franchises around the country which collectively generate more than $150 million in annual sales.

The deal has secured debt financing commitments from ANZ, and includes an underwriting agreement from Craigs Investment Partners and sub-underwriting and other equity commitments from existing shareholders, including cornerstone investor Collins Asset Management.

Veritas shares last traded at 7 cents apiece, valuing the company at just over $4 million -- a 10th of the Mad Butcher's sale price.

The deal is subject to shareholder and regulatory approvals and a shareholder meeting is planned for March 2013.

Mr Morton said the transaction provides the ideal next-step for the business to grow.

"I am excited to remain hands-on in the busienss and to be part of the Veritas Board," he says.

The Mad Butcher Business

The Mad Butcher was established by Sir Peter Leitch in 1971.

It expanded across Auckland in the early 1980s. The first franchise was established in Whangarei in 1998.

A further 26 franchises have been added over the last decade, and there are now 36 stores in 12 cities.

Mr Morton has run the business for 10 years. Four years ago he bought it off Sir Peter, who will continue to be a brand ambassador. 

Previously, Mr Morton was the operations manager of Eagle Boys pizza company before joining Restaurant Brands to become general manager of Pizza Hutt.

As franchisor, the Mad Butcher co-ordinates product procurement and marketing for the network.

The network of butcheries collectively generate annual revenue of more than $150 million.

Who's behind Veritas?

Veritas Investments founding directors Mark Darrow, Tim Cook and Simon Wallace formed the company from NZX-listed Salvus Strategic Investments in 2011 to seek acquisition investment opportunities.

In May this year, Veritas successfully closed a two for one rights issue raising about $700,000 of new capital from existing shareholders wian an 83% take up fo rights.

Current directors Messrs Darrow and Cook will be joined by two new independent directors Phil Newland and Stefan Preston.

Shane McKillen, who set up Eftpos technology and network provider Netco and jointly funded 42 Below vodka, will also join the board alongside Mr Morton.

Mr Wallace will shortly retire.

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9 Comments & Questions

Commenter icon key: Subscriber Verified

Good to see the money some invested in the recent share offer stayed onshore and will go towards a good company!


Good old reverse listing into a cashed up shell - no prospectus needed, no FMA approval.

What this kind of corporate activity suggests is that entrepreneurs are seeing the benefits of NZX listing, and the likely wealth creation accompanying such a listing over the next two years. Such optimism is welcome.


They will need a prospectus however (I assume) when the seek more cash, depending on how they decide to raise the funds.


Can someone help me understand why they have paid so much?


BurgerFuel has a market cap of $80m with total system sales of only $38m.

However, without a prospectus, we wont know for a while what its key metrics are. Royalties and advertising on systems sales of $150m would be circa $10m-$15m plus the wholesale margin on the meat??


Great to see the nz capital markets in full functioning form.


Great to see another strong NZ business coming to the market instead of being sold offshore. We need more of these!


Watch the quality of the meat as they now look to ways of 'maximising shareholder return'.


what a stupid comment to make - i would suggest its more a case of NZers seeing the MB reach many more of them with a great product and great price


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