Domino’s Pizza has bought 170 stores in Germany from Hallo Pizza, the largest independent pizza chain in the country, for 32 million euros ($A48 million).
The deal puts the Australian company in a leading market position by increasing store count to between 300 and 340 in Germany.
A short time ago, Domino’s shares were up 3.2% to $49.19.
Here’s how Domino’s takes the lead in Germany’s pizza market:
Hallo Pizza generated network sales of 80.2 million euros ($A120 million) and normalised EBITDA (earnings before interest, tax, depreciation and amortisation) of 3.5 million euros ($A5.2 million).
Domino’s CEO Don Meij says the deal accelerates the target of operating 1,000 stores in Germany.
“We are excited to share our innovations with Hallo Pizza franchisees to drive the customer experience and higher sales under the Domino’s system,” he says.
An additional 20 million euros ($A30 million) to 30 million euros ($A45 million) of costs will be spent by Domino’s Pizza Deutschland over the next 24 to 36 months to finance integration of the new business.
Domino’s says the deal will improve the profitability of former Hallo Pizza stores and existing Domino’s stores because national advertising campaigns and digital initiatives are leveraged over a larger store network.
And there will be “significant cost synergies”.
Domino’s has been rapidly expanding into Europe.
The company in August posted a record full year underlying net profit after tax of $118.5 million, a 28.8% jump but below its own guidance of 32.5%, due in part to problems with operations in France.