RGR-Minor merger to boost international expansion

June 3, 2003

BANGKOK, Thailand -- The acquisition of Minor Food Group ([MFG] parent company of The Pizza Company) by Royal Garden Resorts (RGR), will position both companies for steady international expansion, according to William Heinecke, founder and chairman of both publicly held firms.

According to a Business Day report, RGR announced on June 2 it was making a tender offer for the remaining 64.3 percent stake of MFG it currently doesn't own. Heinecke and his family own nearly a third of RGR and about 22 percent of MFG.

The deal is expected to be worth 1.4 billion baht (U.S. $33.6 million). Heinecke said funding for the acquisition would be from internal cash flows and some financial facilities, but declined to elaborate further.

Heinecke said the merger would help strengthen its grip on the food and leisure industry and bring synergies in purchases.

"This acquisition should complement the long-term plans of both companies to expand their operations throughout Thailand and abroad," Heinecke said.

While RGR's hotel properties have been hurt by the outbreak of severe acute respiratory syndrome (SARS) in Asia, Heinecke said his food businesses (which also include Sizzler, Dairy Queen and Burger King) remained healthy.

RGR operates in Vietnam and China through Ripley's, Mandara Spa and Royal Garden hotels, while The Pizza Company and Swensen's are expanding both their equity and franchise operations in Vietnam, China and the Middle East.

According to Tisco Securities analyst Vack Somchit, the deal would be profitable in the long term.

"While the hotel business is not doing well, Minor Food Group has been turning a profit for almost a year," Somicht told Business Day. "Besides, RGR rival Central has its own tie up with (U.S.-based Yum! Brands) which owns the Pizza Hut and KFC chains."

Topics: Public Companies

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