Brisbane entrepreneur Phillip Di Bella sealed a $47 million deal yesterday to sell his coffee business, Di Bella Coffee.
Di Bella Coffee was founded in 2002 and has become one of Australia’s largest specialty coffee roasters.
RFG is paying $30 million on settlement – $27.4 million in cash and RFG ordinary shares to the value of $2.6 million.
It will also pay up to $17.3 million in milestone and earn-out performance-based payments with further payments of $2 million in 2015, $6 million in 2016 and multiple of 5.2 to 6.0 in 2016 depending upon earn-out performance.
RFG has money to spare at the moment after its proposed acquisition of La Porchetta fell through earlier this month.
In a sign more deals may be on the table, RFG’s project name for the Di Bella Coffee purchase was “Project Accumulation”.
RFG chief executive Tony Alford said Di Bella Coffee ticked all RFG’s boxes in terms of earnings per share and vertical integration.
“Di Bella Coffee complements and extends the company’s existing market penetration by providing the group with a reputable specialist coffee brand to grow scale amongst each of its coffee and allied beverage distribution channels including franchisee, contract roasting, commercial and the rapidly growing ‘in home’ capsule opportunity inherent in the Gloria Jean’s Coffees acquisition”, Alford said in a statement.
Di Bella will join RFG on a full-time basis, where he will continue to be involved in the Di Bella Coffee business and will also take on an “increasingly important” role within RFG’s coffee and beverage management division.
Di Bella said he is excited by the opportunities the transaction brings to Di Bella Coffee.
“The systems, processes and support structures to be brought to the business via its integration with RFG will allow consolidation of existing domestic opportunities, whilst also allowing greater focus on expanding the Di Bella Coffee brands internationally”, he said in a statement.
Franchise consultant Howard Bellin told SmartCompany RFG is trying to create a franchise conglomerate.
“What RFG is doing is just trying to drive the share price up all the time by taking these places over,” he says.
“They buy enough of them and the price will go up and they will sell out to a private equity firm.”
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