Veritas buys bar owner for $31.2M, 4th purchase in 18 months; shares jump
Veritas Investments, a food and beverage investor, agreed to buy The Better Bar Group of companies for $31.2 million in cash and shares, its fourth acquisition in 18 months. The shares rose after the announcement.
The Auckland-based company said three quarters of the purchase price, or $23.4 million, will be paid in cash, funded by a facility of up to $25 million with ANZ Bank, with the remaining 25 percent funded through the issue of new Veritas shares. The acquisition will add $31 million of sales, helping lift Veritas's annual revenue to more than $90 million, from $30 million last year, the company said in a statement.
Veritas has been on the acquisition trail since its formation from a shell company in December 2011. It bought the Mad Butcher chain in May 2013, half of the meat patty supplier Kiwi Pacific Foods in December 2013 and the gourmet-supermarket chain Nosh Food Market business in September this year. The latest purchase, BBC, has 11 bars in Auckland and Hamilton. Veritas shares rose 10 percent to $1.32 and have fallen 14 percent so far this year.
"This transformational acquisition for Veritas is expected to deliver a significant uplift in revenue and earnings for the Veritas group," chairman Mark Darrow said in the statement. "This significant acquisition fits our investment mandate and complements the existing companies within the Veritas group."
The BBC bars include Ponsonby gastro-bar The Cav, Irish gastro-pub Doolan Brothers, live music venue Danny Doolans, Irish gastro-bar O'Hagan's, traditional English pub Cock & Bull, western/country bar The Honky Tonk and Good Home Public house in Hamilton. It employs about 200 staff.
"We see further opportunities for procurement synergies between the companies, complemented by listed company governance and better resources, enabling the business to be scaled significantly over time," Darrow said.
The acquisition is expected to be completed later this month, pending shareholder approval at the Veritas annual meeting, landlord and key supplier consents, relevant permits and licences and the transfer of key management staff to Veritas, the company said.
BBC chairman Richard Sigley is to join the Veritas board while Geoff Tuttle will remain as BBC chief executive, subject to shareholder approvals, Veritas said.