UAC of Nigeria PLC (UAC), a leading diversified Company with operations in foods, paints, logistics and real estate, has announced a strategic partnership with Famous Brands, the leading quick service and casual dining restaurant operator in Africa, which is to acquire a 49% stake in UAC Restaurants Limited (UACR), hitherto a wholly-owned company of UAC.
The deal is effective as at 01 October 2013.
Larry Ettah, UAC Group Managing Director and CEO, says, “We are delighted to partner with Famous Brands in this venture. This is a transformative transaction which ensures UACR has the necessary strategic partner to unlock the considerable value potential in the QSR landscape which Mr Bigg’s defined 25 years ago and in which it still maintains a leadership position. UACR will be availed of Famous Brands’ tested and highly successful brand stewardship to enhance and reinforce the Mr Bigg’s brand market power. This deal further reinforces UACN’s commitment to ensure we collaborate and leverage international partnerships to accelerate our strategic growth and progress.”
“Nigeria is an attractive destination for QSRs and the country has seen an influx of international brands recently. Future consumer expenditure is underpinned by a range of key drivers, including higher monthly income levels resulting from GDP expansion, an increase in the minimum wage (from N7500 to N18000), and a shift in social class demographics, with the middle class (the business’s core target market) expected to increase to 35% of the population in 2015 compared to 30% in 2009. Significantly, this middle class comprises a large, young population with an average age of 18.”
Ettah identifies that “Nigeria’s other investment incentives include an increasingly supportive business environment resulting from continued political and macro-economic stability coupled with growth positive policies and initiatives. In addition, the country continues to experience an improvement in efficiency, particularly in the distribution and manufacturing sectors. This is attracting positive interest from foreign investors with a long term view of the opportunities.”
Famous Brands Chief Executive, Kevin Hedderwick comments, “We are enormously excited about this transaction, which boosts the Group’s strategy to expand its presence in the broader African QSR market. Famous Brands has operated in African countries north of South Africa’s borders for 15 years and we have a good grasp of doing business in those territories; prudent expansion in a select range of key markets in the region has always been part of our programme.”
“This joint venture delivers compelling benefits for both parties: UACR will be vending in a formidable brand (Mr Bigg’s), local expertise as well as a nationwide distribution network and Lagos-based manufacturing infrastructure. In exchange, Famous Brands will add value to the business through our expertise in managing intellectual property, growing brands and optimising supply chain operations and efficiencies,” Hedderwick says.
Notably, Mr Bigg’s has an extensive on-the-ground presence and huge loyal customer base demonstrated by the 100,000 consumers who visit the brand’s restaurants daily. Mr Bigg’s trading format consists of quick service restaurants situated on high foot-fall sites, and its extensive product offering ranges from pastries and other snacks to burgers and hot meals. About 25,000 pieces of chicken are sold in Mr Bigg’s restaurants daily while some 635,000,000 meat pies have been sold by the brand since its inception.
Hedderwick states, “Historically one of the key challenges of expanding into the rest of Africa has been to source suitable local partners. This acquisition surmounts that obstacle and enables us to not only acquire a substantial stake in an existing leading home-grown brand in Nigeria with opportunities to unlock value in that market, but also to export the format to other markets. We foresee our operations in the rest of Africa becoming increasingly significant to the Group over time.”
Hedderwick concludes, “Our immediate goal is to bed down this joint venture and optimise on the evident success of the existing operation and its enormous potential within the Nigerian market.”