Latest purchase broadens Famous Brands’ horizon
FAMOUS Brands announced yesterday that it had acquired a 49.9 percent stake in the multiawarded commercial catering company, By Word of Mouth, for an undisclosed amount.
The company said it had chosen to be a minimum shareholder in By Word of Mouth by going for a less than 50 percent stake despite five other deals this year where it elected to assume a majority shareholding.
The deal is subject to Competition Commission approval.
Famous Brands said the acquisition was on course to advance its strategy outlined in 2014 to expand the business into the broader leisure and consumer product space.
Strategic adviser Kevin Hedderwick said: “It is a new category, a new space for the company, and we felt more at peace by becoming a minority shareholder this time and let the people who have run the company since inception to be a majority shareholder.”
Early this year Famous Brands bought a tomato paste factory in Coega, acquired 100 percent of Lamberts Bay Foods and 51 percent of Salsa Mexican Grill and Lupi Osteria. Last month the company said it had acquired Gourmet Burger Kitchen for £120 million (R2 billion).
“While this is Famous Brands’s first foray into this category, we are confident that our core competencies will ensure that we create opportunities to elevate this brilliant business,” Hedderwick said.
By Word of Mouth was established in 1993 by Karen Short who was joined by her husband Adrian 10 years later. It is based in Gauteng, in Linbro Park, and also manages a 400-seater venue, The Polo Room, at the Inanda Polo Club.
Next level
“Our partnership with Famous Brands is a great fit for numerous reasons and we are confident that Famous Brands will provide the support that we need to take our business to the next level, including establishing an offering for our clients across the country,” Short said.
Nolwandle Mthombeni, an equity analyst at Mergence Investment Managers, said although the By Word of Mouth acquisition would probably be small, it would give Famous Brands access to a different segment of the market.
“When a company like Famous Brands that houses multiple leading brands and (has) created one of the most efficient supply chain networks that allows it to supply most of the franchisees inputs, you are bound to start tapping into more segments of the market,” Mthombeni said.
“This latest acquisition of a catering company tells us that Famous Brands is expanding its footprint and expertise into other areas of the food service industry. As the… industry becomes more fragmented… it is only natural to diversify and seek new avenues of growth.”
Famous Brands shares rose 1.82 percent on the JSE yesterday to close at R168.