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Tue 13 Jan 2015 08:47 PM

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Sale of Kuwait food company Americana said to falter

Sources say deal is close to being put on hold, weighed by differences on price

Sale of Kuwait food company Americana said to falter

The sale of
Kuwaiti food company Americana is close to being put on hold, partly due to
differences on price, three sources familiar with the matter said on Tuesday.

Americana, backed by Kuwait's
billionaire al-Kharafi family, operates franchises for restaurant chains
including KFC and Pizza Hut. The group has a market value of 1.13 billion
dinars($3.84 billion).

Reuters reported in April last year that
Americana was exploring a sale with investment bank Rothschild.

Private equity funds KKR and CVC were
among the main contenders for the business in a lengthy bidding process that
also attracted interest from Saudi food producer Savola Group among others.

Americana said in November last year
that the Kharafis were in preliminary talks with various parties.

But the sale is faltering because offers
have so far failed to meet price expectations and buyers have struggled to
reach agreement with the al-Kharafi family.

Two of the sources said the deal might
not be totally dead and an agreement could still be reached.

"It remains to be seen if it comes
back at a later date. But at the moment we have no traction on this deal at
all," one source familiar with the matter said, asking not to be named
because the talks are private.

CVC and KKR declined to comment. MAK,
the private investment company backing Americana, was not immediately available
to comment.

Sources close to the deal said the fact
that the business was family-backed had thrown up obstacles as this introduced
an element of emotional attachment to the pure economics of the deal.

The Kharafi family own 66.8 percent of
Kuwait Food Company, according to Thomson Reuters data, through the private
investment company MAK (Mohammed Abdulmohsin al-Kharafi & Sons). Kuwait
Food Company sells goods under the brand name Americana.

Americana, founded in 1964, says it is
the largest restaurant chain operator in the Middle East and North Africa
region. It operates more than 1200 food and drink outlets globally, including
for Krispy Kreme, TGI Friday's and Costa Coffee.

Last year, its third-quarter net profit
rose 33.6 percent to 10.9 million dinars and operating revenue increased 5
percent year on year and costs fell.

Deal multiples in the food and drink
sector have been on the rise, hitting the low teens for some deals, as buyers
from Japan, China and the Philippines look to expand into Europe and North
America, while global players seek out emerging markets to offset sluggish demand
in mature regions.

At the same time, the global food sector
as a whole has benefited from a flight to safety and reliability. The Thomson
Reuters Global Food Processing Index, a broad share price index of food makers
from around the world, is up more than 7 percent over the last year.

In 2014, there were 70 private equity
deals involving Middle Eastern companies with a total value of $5.86 billion,
according to Thomson Reuters data. In Europe, there were 613 private equity
deals totalling 100.1 billion euros ($117.96 billion) in the year to Dec. 18,
according to EY.

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