Veritas buys half of Kiwi Pacific Foods
Mad Butcher owner Veritas Investments has acquired a 50 per cent shareholding and a joint venture interest in meat patty manufacturer Kiwi Pacific Foods for $3.4 million.
The remaining 50 per cent of Kiwi Pacific Foods is owned by Antares Restaurant Group, which holds the Burger King franchise in New Zealand.
As part of the transaction, Veritas has also acquired the rights to manage Kiwi Pacific's operations on behalf of both shareholders.
Kiwi Pacific Foods owns a meat patty production facility in Auckland, where it employs 14 staff.
It has a preferred supplier arrangement with Antares through which it has been supplying meat patties to Burger King in New Zealand for nearly 20 years.
The purchase price for the acquisition is made up of three elements including $2.8m in cash, $600,000 worth of Veritas shares issued at $1.38 per share, and an earn out based on Kiwi Pacific Foods' export profits over the three years following acquisition. Under the earn out, the purchase price will be increased by an amount equal to 25 per cent of Kiwi Pacific Foods' net profit before tax attributable to export sales in each of the three years after the acquisition.
The $2.8m cash component of the purchase price has been funded by a debt facility provided by ANZ Bank. Veritas has stated it otherwise has no further debt and expects to pay dividends in line with its forecast in its March 2013 investment statement.
Mad Butcher chief executive Michael Morton said Kiwi Pacific Foods could be supported by the procurement base of Mad Butcher and aligned the company with the Burger King brand as its cornerstone client.
"We see good growth opportunities in export markets through the Burger King connections internationally," Morton said.
Veritas chairman Mark Darrow said Kiwi Pacific Foods was expected to contribute about $780,000 of profit before tax and $550,000 of net profit after tax in the first full year of ownership, after associated acquisition costs.