Johannesburg – Shares in franchise group Taste Holdings [JSE:TAS]
jumped on Thursday after the group announced it has acquired all forty St. Elmo’s pizza franchises for R8m.
By 16:00, Taste shares gained more than 8% to 65c. The AltX-listed group, which owns franchise food groups Scooters Pizza and Maxi’s, bought the jewellery chain NWJ in 2008. The group currently has more than 270 outlets nationally across the three brands.
Taste will also buy St. Elmo’s Cape Town-based sauce and spice manufacturing facility, which it hopes will boost its vertical integration strategy within the food division.
Carlo Gonzaga, CEO of Taste Holdings said the facility will immediately start producing sauces and spices for the whole group, complementing the central kitchen Taste started last year for Maxi’s and Scooters.
St. Elmo’s has been in operation since 1987. Gonzaga said the purchase offers valuable intellectual property, especially within the manufacturing division. “Due to the fact that our businesses are very similar we will be able to successfully leverage economies of scale, especially in terms of the central kitchen,” he said.
Although also operating nationally, St. Elmo’s is primarily based in the Western Cape and will therefore stand to benefit from Taste's support structures in Gauteng and KwaZulu Natal .
Taste intends to fund the cash purchase through a combination of its own funds and debt.