Taste Buys St Elmo’s To Increase Economies Of Scale

Business Day:

TASTE Holdings yesterday announced details of the proposed acquisition by its subsidiary Scooters Pizza of St Elmo’s, a pizza franchise, saying the purchase would vertically integrate its food division and increase economies of scale in its franchising and manufacturing divisions.

AltX-listed Taste said on August 31 it would acquire the franchising, food manufacturing and distribution business operated by the sellers (St Elmo’s) with effect from November 1.

Taste said its earnings were expected to be enhanced from next year by the acquisition.

The purchase consideration for St Elmo’s would be about R8m “plus the value of the stock in the distribution centre at the effective date and the value of the debtors of the business, adjusted for long outstanding and other nonrecoverable items at the effective date,” Taste said.

It said it would use cash raised through debt funding, as well as existing reserves to fund the acquisition.

St Elmo’s is a countrywide, franchised chain of 40 pizza outlets founded 23 years ago.

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