Domino's Pizza moves into Germany

Joe Raedle/Getty Images

Domino’s Pizza, fresh from establishing a beachhead in France, is moving in on the German fast food market.

It is buying Joey’s Pizza, the largest pizza delivery chain in Germany with 212 stores. Domino’s is paying up to 79 million euros ($AU120 million), depending on whether targets are achieved.

The company also upgraded its 2016 profit guidance for the second time to 30% higher than the previous year from 25%.

A short time ago, Domino’s shares were up almost 13% to $55.76.

Domino’s in October bought Pizza Sprint, a chain in Western France with 89 stores, for 31.5 million euros ($AU50 million). That deal gave Domino’s a total of 330 stores in France.

The latest acquisition in Germany represents a significant expansion in European operations. The store count in Europe is expected to increase to 775 stores.

The purchase is being done through a joint venture between the Australia-based Domino’s Pizza Enterprises Limited and the UK-listed Domino’s Pizza Group plc. The Australian group will have a two-thirds equity interest in the partnership.

The transaction is subject to regulatory and other approvals and is expected to complete in the first quarter of 2016.

The existing CEOs of Joey’s Pizza, Friedrich Niemax and Karsten Freigang, have been retained to assist with conversion of Joey’s stores to Domino’s Pizza brands.

“Germany is the fourth largest pizza market in the world and our entry into this market represents an exciting long term growth opportunity,” says Don Meij, Domino’s CEO.

“The acquisition of the market leading Joey’s Pizza business provides immediate scale and marketing presence which we can build from.”

The transaction will have a small positive impact on Domino’s underlying 2016 forecast earnings per share because the contribution will only be for part of the year.

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