Famous Brands: eyeing chicken?

Johannesburg - Wimpy, Debonairs Pizza and Steers parent Famous Brands announced on Tuesday it is in negotiations with another party, which analysts said could be the chicken fast foods brand the company was looking for.

Last year Famous Brands promised shareholders 2009 would be the year the group brings a chicken brand to its portfolio. It is already well positioned within the burger and pizza segments.

"This could be an opportunity to enter the well-liked chicken category," said Coronation Fund Managers' Quinton Ivan. "Famous Brands has always said it would buy an existing player as opposed to building a brand from scratch."

The strongest players in the chicken fast food space are KFC, Chicken Licken, Nando's and Shoprite's Hungry Lion.

Zahira Osman from Afena Capital said the company had been in negotiations in the past. "It's a matter of timing and price, and also whether Famous Brands would be able to entrench the brand in either the number one or number two market position."

Ivan said it could not be KFC, Chicken Licken or privately-owned Nando's. "Nando's is a big player doing well in SA as well as abroad and is currently not for sale."

He also said Chicken Licken did not sit well with Famous Brands. "I don't see that as a good fit for Famous Brands as it does not complement the Steers and Wimpy brands, which are usually located in shopping centres," said Ivan.

KFC is owned by US-listed firm Yum Brands and is therefore not an option, said Ivan.

Famous Brand shares were trading 2.79% higher at 1 845c/share in early trade on Tuesday.

- Fin24.com