SAO PAULO (Reuters)-International Meal Company (BMI-) announced on Wednesday that Kentucky Foods Chile will pay the company $ 35 million, in an agreement that foresees the creation of a joint venture to accelerate the expansion of the Fast Food KFC network in Brazil.
The operation includes the segregation of IMC assets related to KFC brand for a new corporate structure, in which the Chilean group will deter 58.3% of the network’s operation in the country, while IMC will have the remainder.
The transaction values KFC in Brazil at US $ 60 million – above the IMC $ 54.56 million market value, whose portfolio includes its own and franchised brands such as pizza Hut and roasted chicken, among others, besides KFC.
According to IMC’s executive president Alexandre Santoro, part of the amount will be paid at the closing of the operation, scheduled for the third quarter, and the rest in two years, with the resources being used “mostly” to pay debt.
“With this resource, we reduced debt and improve the capital structure,” the executive told Reuters, adding that IMC will no longer need to make capital contributions in the business, which will be under the responsibility of the new partner.
“Today, a relevant part of our Capex is an investment in (network) KFC,” he said, noting that such a transaction will also allow a greater focus on the other brands of the group.
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Santoro calculates a “moderate EBITDA (profit before interest, taxes, depreciation and amortization) of IMC with the split,“ maximum 10%”. In the case of revenue, considering its own stores, estimates an effect of about $ 400 million.
The executive stated that the agreement includes some options for the future, to increase participation or sell another part, “but nothing in the short term.”
EXPANSION
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Joint Venture will be exclusive to the Brazilian market about the operation of the US controlled brand by Yum! Brands, unlike the current BMI agreement, although today all the chain stores in the country are linked to the company, explained Santoro.
The KFC has been present in Brazil since 2006, being operated by BMI since 2019. The Master franchised contract with Yum! Brands has a deadline until 2032. Currently, the brand has 230 stores in Brazil.
In the announcement statement, Kentucky Foods Chile, which operates approximately 550 KFC’s own stores in Latin America, signaled being confident to join the Brazilian market.
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Yum! Brands assessed that the agreement opens a new prospect of growth in the country.
The IMC CEO stated that operation has the ability to unlock value for the KFC network in Brazil, citing the entry of a group with experience in the brand and capitalized, dedicated structure, supplier chain benefits, among others.
“We really empower this business …. and we will be able to speed up growth and improve the margins of the business.”
