Domino's Pizza Enterprises boss Don Meij believes he is snatching market share in Australia from hamburgers, fried chicken and sandwich shops, and will now go after sushi eaters after unveiling the $280 million acquisition of Japan's third-largest pizza delivery chain.
The pizza veteran and former delivery boy on Tuesday unveiled the company's biggest acquisition since Domino's floated in 2005. The Australian-based group will buy a 75 per cent stake in Domino's Pizza Japan and set it on a strong growth trajectory to more than double its store numbers.
Domino's has triggered a $156 million 5-for-23 share offer priced at $10.20 to partly fund the purchase from private equity firm Bain Capital. Bain will remain a 25 per cent owner in the business.
The company will also provide $101 million of new debt funding.
The deal adds to Domino's geographic spread, which takes in its Australia/New Zealand base and parts of western Europe, and will push Domino's annual revenues through to the $1 billion level for the first time.
Mr Meij said the growth potential in Japan was enormous, with the average Japanese only ordering a pizza three times a year against the average Australian who consumes a pizza every 18 days.
"The acquisition represents an exciting opportunity to leverage our proven track record of successfully growing the Domino's network to deliver shareholder value," he said.
Mr Meij said Domino's Pizza Japan had 259 stores, with a target to grow that to 600 stores. The acquisition would lift Domino's store numbers to more than 1200 stores across three continents. The acquisition would be 9 per cent earnings a share accretive, Mr Meij said.
Domino's also unveiled its full-year results, built on booming sales into Europe and continued growth in its Australian operations, which showed a 6.4 per cent lift to $28.66 million, while total sales were up 5.4 per cent to $848.6 million. Ignoring one-off charges related to transactions, acquisitions and legal charges during the year, profit rose 13 per cent to $30.4 million. Domino's was taking customers from other fast-food categories, such as burgers and fried chicken, helped by the company's value offer and its use of digital platforms such as ordering from smartphones.
The company has forecast same-store sales growth in Australia/New Zealand of 2-4 per cent for 2014, up from 2013 guidance of 2 per cent, and EBITDA growth of 15 per cent.
Domino's declared a final dividend of 15.4¢ a share, taking the full-year payment to 30.9¢.