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Johannesburg - Famous Brands [JSE:FBR] announced Tuesday that it had acquired the franchise agreements, trademarks and intellectual property of the O'Hagan's Irish Pub and Grill brand from O'Hagan's Franchising for an undisclosed sum.
The purchase consideration is less than 0.5% of Famous Brands' market capitalisation, it said.
The acquisition will be funded through existing cash reserves, and will be earnings enhancing.
Assuming successful conclusion of the due diligence exercise, the effective date of the transaction is 1 December 2010.
Currently the O'Hagan's franchised network consists of 26 outlets, 22 in South Africa, one in Botswana, one in Zambia and two in Zimbabwe.
"Having recently entered the Pub and Restaurant category via our acquisition of the KEG and McGinty's brands, the acquisition of O'Hagan's provides us with an opportunity to literally double the size of our existing network in this industry, at a compelling price," said Famous Brands CEO Kevin Hedderwick.
"To open another 26 franchised pubs would conservatively take the group about five years, whereas with this prudent investment that is immediately achieved."
Hedderwick said existing surplus capacity would help it increase its pub and restaurant division's turnover by 50%, but nearly double the operating profit.
Also key to this acquisition are the synergies and benefits to be extracted from integrating O'Hagan's into the Group's comprehensive business model.
The business of O'Hagan's Franchising was acquired in 1999 by entrepreneur John Weir-Smith.
Famous Brands brand portfolio includes Steers, Wimpy including UK, Debonairs Pizza, FishAways, Mugg & Bean, tashas, House of Coffees, Brazilian/Brazilian Café, Blacksteer, Giramundo, KEG, McGinty's and Vovo Telo.
