The Age reports…
“A takeaway and cafe giant is buying Gloria Jean’s Coffees for $163.5 million from a man who brought the franchise to Australia.
Retail Food Group, which owns Michel’s Patisserie and Donut King, will soon control the 35-year-old cafe group which operates 800 outlets in more than 40 countries.
They are buying the global franchising and coffee roasting business from Gloria Jean’s executive chairman Nabi Saleh’s private company.
In 1996, Mr Saleh and Peter Irvine brought the franchise to Australia, opening an outlet in the Sydney suburb of Miranda.
Mr Saleh, who is also a board member of the Hillsong Pentecostal church, is staying with the business for at least another two years, along with his senior management team.
He said Retail Food Group’s reputation as a food and beverage operator and expertise in building franchise businesses made them ideal to lead the continued expansion of Gloria Jean’s.
Retail Food Group has bought Gloria Jeans from Tea and Coffee Traders Pty Ltd, which Mr Saleh founded in the mid-1980s, along with several other similar companies in Sydney’s Castle Hill.
Gloria Jean’s has 358 stores in Australia, 87 in the United States and franchises in 40 other countries.
The deal comes four months after the Singapore-based Global Yellow Pages pulled out of a deal to buy the whole group.
Retail Food Group, which runs Cafe2U and The Coffee Guy, said the global coffee chain had long been a target.
The Gold Coast company, founded in 1989, will pay $153.5 million in cash plus $10 million in its own shares, plus up to a further $16.4 million depending on Gloria Jean’s performance.
It will raise $55 million to help fund its purchase through the issue of new shares to institutional and sophisticated shareholders.
The company has also increased its senior debt facility with National Australia Bank, from $135 million to $253 million.
Its purchase of Gloria Jeans is expected to be settled by December.
It is also buying privately-owned gourmet coffee maker Cafe Palazzo.
RFG shares traded at $4.86 ahead of the announcement.
WHAT RETAIL FOOD GROUP ALREADY OWNS:
* Donut King
* Michel’s Patisserie
* Brumby’s Bakery
* Esquires Coffee
* Crust Gourmet Pizza Bar
* Pizza Capers
THE GLORIA JEAN’S STORY
* 1979, founded in Chicago suburb of Long Grove
* 1996, first Australian outlet opened
* 2004, Australian arm acquires global franchise rights outside US
* 2009, all franchising rights and intellectual property held in Australia”