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Pizza Magia merges with Snappy Tomato Pizza

June 29, 2005

LOUISVILLE, Ky. — Pizza Magia International is merging its operations with Snappy Tomato Pizza, a 75-unit chain based in Florence, Ky. The new venture marks the latest chapter in Pizza Magia's ever-changing story.

After peaking at 33 units, store numbers have dropped to about half that. Pizza Magia also recently trimmed its headquarters staff and shut down its commissary facilities, changes company officials said reflected its new focus on future operations in India.

According to a news release, Pizza Magia chief executive Dan Holland began merger talks with Snappy Tomato several months ago.

"To continue growing in this economy, we needed a stronger yet agile entity," Holland said. "Snappy Tomato's larger number of stores dramatically increases buying power and provides significant economic efficiencies in key areas like procurement and marketing. I reviewed several emerging regional concepts and determined that Snappy Tomato was the best fit for our group."

Holland said that conversion of existing Pizza Magia stores to Snappy Tomato units "will begin almost immediately and be completed some time this summer."

The release did not state the number of units to be converted.

Pizza Magia has had a tough row to hoe since launching in 2000. In that same year, cross-town rival Papa John's filed a lawsuit against several founding Pizza Magia executives who once worked for Papa John's. Holland, Papa John's president from 1989-'95, was among those charged with violating federal trademark law, acquiring Papa John's trade secrets and confidential information, as well as alleged breach of confidentiality and non-competition agreements. (See related stories Pizza Magia held in contempt in legal battle with Papa John's and Pizza Magia withheld documents, says federal magistrate.)

The suit was settled in 2003 (read Lawsuit settled between Papa John's and Pizza Magia), but terms were not disclosed. Regulatory filings from Papa John's hint, however, that Pizza Magia paid a penalty of $2 million.

The suit likely stunted Pizza Magia's growth as well, as it struggled to sell franchises as the litigation stretched on. Stores in some established markets since have been shut down or sold to other chains. Toldeo, Ohio-based Marco's Pizza converted nine Pizza Magia units around Indianapolis to the Marco's brand earlier this year.