GPI gobbles up a BEE holding in Spur, but competition is still on the menu
Deal set to boost firms’ back-end businesses
THE BLACK economic empowerment (BEE) transaction between Grand Parade Investment (GPI) and Spur will not affect the competitiveness of the two companies’ brands, but will boost their back-end businesses.
An investment company with interests in the gaming and food service businesses, GPI has bought 10 percent of the issued share capital of Spur. The deal will see GPI subscribe for 10.85 million new Spur shares for a total consideration of R294.7 million.
GPI will fund the deal through a combination of existing cash resources of R72.3m, preference share funding from Spur of R72.3m and a R150m loan from Standard Bank.
GPI, which comes in as Spur’s BEE partner, already holds the rights to operate and franchise American fast-food outlet Burger King across southern Africa.
Spur chief executive Pierre van Tonder said the transaction would see a lot of synergies coming from the back-end of the business, “where it does not conflict at all with GPI’s plans for Burger King“.
“We all fight for the share of the stomach,” Van Tonder said.
GPI chief executive Alan Keet said the company’s investments needed to be judged on their financial merits and the Spur opportunity ticked all the boxes in terms of its growth plans. “We saw this as a good investment that will satisfy all our needs.”
Keet said 10 percent was all that was on offer, “but if Spur made more shares available we would be more than happy to acquire more”.
He added that the transaction was in line with GPI’s strategy of leveraging its strong balance sheet and empowerment credentials to invest in value-enhancing opportunities. “It also ties in with GPI’s plans to grow its presence in the food and hospitality industry,” Keet said.
GPI chairman Hassan Adams said: “A partnership with the leading restaurant operator is going to significantly strengthen our ability to achieve the ambitious targets we have set in the food industry and related sectors.”
Spur owns food outlets such as John Dory’s, Panarottis Pizza Pasta, Spur Steak Ranches and Captain DoRegos.
Both companies have recently made new investments in the food service business – Spur through the acquisition of a 30 percent stake in meat processing business Braviz Fine Foods, and GPI with a purchase of a majority stake in Mac Brothers Catering Equipment.
Most of Spur’s franchise stores are already buying equipment from Mac Brothers Catering Equipment.
From an empowerment perspective, Van Tonder said Spur had to make sure it found a suitable partner.
Spur gained 0.71 percent to close at R31.32 and GPI added 1.61 percent to R6.30.