RBD - Restaurant Brands

[percy]

Thanks Percy makes sense. Think I'll wait and see what happens up until the next dividend payment :) My sell point would be below $5. I don't have a lot invested so not too worried in movements before then.

Yes I found it a bit hard selling and missing the dividend,but when I have cash, some good opportunity usually comes along.I have brought AWF recently,and they are due to report next month.I do not hold TIL at present,but they could surprise when they report next month.

[JeremyALD]

Chart is already back to where it was pre-announcement. As I stated the chart doesn't ring any alarm bells to me.

[JeremyALD]

Up to $5.60 now. Building some good momentum. Percy it's not too late for you to buy back in :)

[percy]

Up to $5.60 now. Building some good momentum. Percy it's not too late for you to buy back in :)
Looks as though I got my timing wrong.
However I will stay out in the meantime.
That PE at 23.52 means a great deal of earnings have been priced into the share price.
If they achieve it well and good.If they don't .......well we know the market will react badly.
A fair bit of risk .

[Lewylewylewy]

Pretty pleased​ with the way there are going. This is where I put most of my (stock market) money this year. Might exit on the next news announcement to cash in. Tempted to switch my bet to FPH if they drop any further though. That said, it's hard to turn down RBDs growth strategy with the beat-the-bank dividend rates. Curious to see what they have planned for next year.

[LAC]

Yeah I stuck in there after hearing their growth plans as well but SP is getting up there now, that PE is looking like I might cash up soon - might have to give the divi a miss. Just need to see what's looking like value to move the funds to, slim pickings atm.

[hardt]

Yeah I stuck in there after hearing their growth plans as well but SP is getting up there now, that PE is looking like I might cash up soon - might have to give the divi a miss. Just need to see what's looking like value to move the funds to, slim pickings atm.

A high PE does not necessarily mean underweight, there are plenty of picks out there with high multiples that are worth the trailing premium in order to get in on the usually bright future ahead.

RBD could find its place at a PE of 30+ much like FPH if they show consistent sustainable growth...

[Lewylewylewy]

Completely agree!

What's on the cards next year is crucial.

Hard to get increases or of the mindset though... But if you want to gamble on a change, why not one with such a high dividend? I'm holding out for a comfortable $6

[LAC]

Im out now, couldn't take that gamble. Wish everyone else luck, really hoping it gets that $6.xx

[Lewylewylewy]

I see a top of $6.40, either end of this year or into next. I can't see it going much higher without news or some affluent insiders. I'm holding for a bit until I get itchy fingers (happens :( ) or unless I see something shiny.

[kura]

Yay, got my free lunch voucher in post today (with annual report )

[JeremyALD]

Great first quarter in terms of revenue growth. Nearing that $6 mark :)

[winner69]

Great first quarter in terms of revenue growth. Nearing that $6 mark :)

Chart looking good eh

Like you even at 530 recently the chart looked OK - that wasn't that long ago.

[winner69]

I'm looking forward to $7 sometime ....hopefully by Xmas, if not by this time next year

[Meextr]

Good on you with the free lunch voucher. Do you get many of these freebies with this company?

[JayRiggs]

Good on you with the free lunch voucher. Do you get many of these freebies with this company?

You get a huge KFC chicken and pizza hut buffet at the AGM!

[Meextr]

Would only be worth doing for me if the AGM was in Rotorua.

[winner69]

Anybody with decent charting software able to a 10 year RBD chart showing a 250 day ROC (250 trading days) for me.

[winner69]

Must have got to an all time high today

Can't do much better than that

[Lewylewylewy]

Still the success of the coming year isn't fully priced imo. I'm, this could reach 6.40 within a year. What happens after that depends on the next lot of plans for expansion, which I'm eager to hear.

I'm thinking about holding onto this one for a while, it's currently my largest holding. Of course this could change at any time, I'm quite whimsical and am still learning patience even at age 35 😔

[stones]

Still the success of the coming year isn't fully priced imo. I'm, this could reach 6.40 within a year. What happens after that depends on the next lot of plans for expansion, which I'm eager to hear.

I'm thinking about holding onto this one for a while, it's currently my largest holding. Of course this could change at any time, I'm quite whimsical and am still learning patience even at age 35 

It don't come easy and I'm 72

[bull....]

Anybody with decent charting software able to a 10 year RBD chart showing a 250 day ROC (250 trading days) for me.

not able to post it, but shows ROC above 0 first in 2009 at 70 odd cents then again crossing 0 in 2012 at just above 2 dollars hasnt been under since.

you using this indicator on this stock?

[winner69]

not able to post it, but shows ROC above 0 first in 2009 at 70 odd cents then again crossing 0 in 2012 at just above 2 dollars hasnt been under since.

you using this indicator on this stock?

Thanks bull

That's how my simple chart shows it but putting the price and ROC together looks messy

I've been holding since sub $1 days in 2008/2009. My premise is that generally the share price is higher than a year ago so with dividends it is a great hold.

As you say that broke down in 2012 and I reduced my holding - retaining a fair chunk because RBDs PE fall was in line with the market (assume that market action affected RBD)

Since then my premise has held - even when some on here thought that at 530 odd the chart was sad and sold out ......gee it's over $6 now

Occasionally it looks like time to sell but as always ahead of a year ago (with divies and free vouchers) it was a case of why sell. The original ones are getting close to 8 bagger (on a average price including the sales they are about a 25 bagger but I don't things that way)

Yep $6 plus now - probably $7 bucks in a years time

[RupertBear]

Thanks bull

That's how my simple chart shows it but putting the price and ROC together looks messy

I've been holding since sub $1 days in 2008/2009. My premise is that generally the share price is higher than a year ago so with dividends it is a great hold.

As you say that broke down in 2012 and I reduced my holding - retaining a fair chunk because RBDs PE fall was in line with the market (assume that market action affected RBD)

Since then my premise has held - even when some on here thought that at 530 odd the chart was sad and sold out ......gee it's over $6 now

Occasionally it looks like time to sell but as always ahead of a year ago (with divies and free vouchers) it was a case of why sell. The original ones are getting close to 8 bagger (on a average price including the sales they are about a 25 bagger but I don't things that way)

Yep $6 plus now - probably $7 bucks in a years time

Nice one Winner! Pleased to hear you have done so well you're definitely a Winner with this one, no worries :D

[winner69]

Yes Rupert - sometimes trades can last for years and years ..... and then are some that run out of puff after a few months ....and then the odd one that lasts only a few days or weeks, generally the losing ones


As an aside if I didn't already have RBD I don't think I'd be buying at $6

[RupertBear]

Yes Rupert - sometimes trades can last for years and years ..... and then are some that run out of puff after a few months ....and then the odd one that lasts only a few days or weeks, generally the losing ones


As an aside if I didn't already have RBD I don't think I'd be buying at $6

Thanks for the aside Winner as I would love a buy few but yes maybe not at $6. Might wait and see if it drops down a bit and then get a few. Mind you thats what I thought when it was $5.50 :mellow:

[JeremyALD]

Anyone at the ASM today? If so summary would be appreciated!

[blackcap]

You get a huge KFC chicken and pizza hut buffet at the AGM!

Some of our more savvy Polynesian friends in Auckland may have bought a few RBD shares just for this very reason :)

I bought some RBD and then split my holding into different entities (off market transfer form) to get a few more free meals which I distribute come June :)

It's a pity I could not go today, I was also keen for the chicken but alas scheduling did not allow a trip to Auckland.

[artemis]

Some of our more savvy Polynesian friends in Auckland may have bought a few RBD shares just for this very reason :)

I bought some RBD and then split my holding into different entities (off market transfer form) to get a few more free meals which I distribute come June :)

It's a pity I could not go today, I was also keen for the chicken but alas scheduling did not allow a trip to Auckland.

They used to cycle the ASM around main centres, but seems to be just Auckland these days. Maybe they need some encouragement ....

[JayRiggs]

They used to cycle the ASM around main centres, but seems to be just Auckland these days. Maybe they need some encouragement ....

Just got back from the AGM. Great lunch buffet.
There were about 12 big plates full of original recipe chickens, which was quickly all consumed within 20mins or so. You really gotta get in there for the chickens, people were greedily piling them up on their plates.
There were also heaps of pizzas of various varieties, which was consumed at a more steady pace. Seemed to be more pizzas than chickens, or maybe the chickens were more popular than the pizzas!

They said the AGM was held in Auckland this year, because the past year, RBD has gone through many changes, with the Aussie KFC, Hawaii Taco Bell and Pizza Hut acquisitions. And they wanted to address these changes to as many shareholders as possible, with 40% of the shareholders in Auckland. I guess we can expect the AGM to go back to Wellington or Christchurch next year.

Also mentioned was a possible re-introduction of the DRP, due to the high share price and big levels of debt.

[Yoda]

http://www.scoop.co.nz/stories/BU1706/S00732/restaurant-brands-sales-to-exceed-700-mln-in-2018.htm

https://www.nbr.co.nz/article/restaurant-brands-seek-asx-dual-listing-b-204465

[Lewylewylewy]

I vaguely recall reading that one of the big chicken producers has had lower profits due to chicken being cheaper, despite increased sales... Tegal, I think? Sorry, I don't have a source.

Still, who does that sound like good news for? I foresee a profit announcement to come in above expectations.

[Lewylewylewy]

Is it because I'm now more aware of KFC, or does it seem like KFC are absolutely everywhere? Adverts constantly playing on the radio, KFC littered on the floor, supporting sports events, etc.

Anyone who's been watching KFC over the years able to tell me if this is normal or if it's not just my perseption, please?

[hardt]

Is it because I'm now more aware of KFC, or does it seem like KFC are absolutely everywhere? Adverts constantly playing on the radio, KFC littered on the floor, supporting sports events, etc.

Anyone who's been watching KFC over the years able to tell me if this is normal or if it's not just my perseption, please?

I would hope we all noticed... even though I don't eat KFC as it gives me the runs... I hold a tiny parcel of RBD.



RBD.NZX

FY15A

FY16A

FY17A

CAGR%



OPERATING REVENUES GENERATED - NZDm

372.6

404.1

517.5

17.85%



Cost of marketing - NZDm

18.9

20.7

28.1

21.93%

[artemis]

Last week of Election 2017 and this morning the only positive stock in my portfolio is RBD.

I draw no conclusions (not many anyway).

[huxley]

Last week of Election 2017 and this morning the only positive stock in my portfolio is RBD.

I draw no conclusions (not many anyway).

Don't worry, I'm sure there'll be some sort of junk food tax in the works lol :)

[blackcap]

Looks like very good increase in same store sales both here and in Aus. Gotta be good for the SP. Even PH was up but unfortunately Carl Jr and Starbucks down. But KFC the real star.

https://www.nzx.com/companies/RBD/announcements/307554

[Antipodean]

KFC is the consistent start in RBD's sky. We now have early signs that overseas KFC acquisitions will turn this star into a constellation. Carls Jr continues to be a bit disappointing, questions must be being asked on it long term. Very good to see Pizza Hut also performing well.

[Lewylewylewy]

Where to from here is what I want to know

[LAC]

Where to from here is what I want to know
I think they will work on getting more out of the current businesses, maybe streamline the new acquisitions and look at getting rid of Starbucks and non performing Pizza huts so the business looks better on paper. I dont see further acquisitions in the short term. I would really like them to invest a little in a NZ brand to get franchised outside of NZ (as a side project which is funded like a startup). They have the ability to scale fast but I dont think the current team have time to look into that, they going after the big fish. But it still would be nice to get an NZ started franchise owned by RBD

[Hectorplains]

I think they will work on getting more out of the current businesses, maybe streamline the new acquisitions and look at getting rid of Starbucks and non performing Pizza huts so the business looks better on paper. I dont see further acquisitions in the short term. I would really like them to invest a little in a NZ brand to get franchised outside of NZ (as a side project which is funded like a startup). They have the ability to scale fast but I dont think the current team have time to look into that, they going after the big fish. But it still would be nice to get an NZ started franchise owned by RBD


They had a crack at shifting Starbucks back in 2010. I can't think of an obvious buyer, and the country is not short on franchise 'me too' cafes but it wouldn't hurt to have another go now. They could roll out Taco Bell but for some reason, one that has never clearly been explained, that isn't in the plans.

[blackcap]

Anyone aware of any information as to the sudden interest today? Up 3.8% to $6.90!

[Snoopy]

Thanks bull

That's how my simple chart shows it but putting the price and ROC together looks messy

I've been holding since sub $1 days in 2008/2009. My premise is that generally the share price is higher than a year ago so with dividends it is a great hold.

As you say that broke down in 2012 and I reduced my holding - retaining a fair chunk because RBDs PE fall was in line with the market (assume that market action affected RBD)

Since then my premise has held - even when some on here thought that at 530 odd the chart was sad and sold out ......gee it's over $6 now

Occasionally it looks like time to sell but as always ahead of a year ago (with divies and free vouchers) it was a case of why sell. The original ones are getting close to 8 bagger (on a average price including the sales they are about a 25 bagger but I don't things that way)

Yep $6 plus now - probably $7 bucks in a years time

We didn't have to wait that long from your 3rd June 2017 post. RBD touched 7 bucks today. Was that you selling out your 1,667 shares at 2:57pm this afternoon Winner?


Anyone aware of any information as to the sudden interest today? Up 3.8% to $6.90!

It has just listed on the ASX. Aussies recognizing a good thing?

SNOOPY

[blackcap]

We didn't have to wait that long from your 3rd June 2017 post. RBD touched 7 bucks today. Was that you selling out your 1,667 shares at 2:57pm this afternoon Winner?



It has just listed on the ASX. Aussies recognizing a good thing?

SNOOPY

Maybe, but I have not really seen any trades on the ASX to date and no depth either side to speak of...

[winner69]

Maybe, but I have not really seen any trades on the ASX to date and no depth either side to speak of...

....going the Turners way ...and TRA sold on the ASX yet

[Lewylewylewy]

There thing holding the RBD SP back (in my opinion) is that people are nervous about success abroad. The price is increasing because people are feeling more confident about it, and also I would guess that a listing in ASX would draw investors with less historical knowledge of failures abroad in the old days.

Personally, I can't see operations abroad going any other way than superbly. I think this stock has some upwards drift left in it as people revalue the excellent returns vs increasing confidence in their ability to execute.

Hence I'm still holding this while dividend is great and PE is low. Once PE is high (with investor confidence in operations abroad), and if the growth story no longer exists at that time, then I'll consider selling... But what I'm hoping for is that another year of great returns will go by, and the SP will go up with evidence of excellent execution, and next year there will be new expansion plans in the mix.

It's my largest holding (half portfolio), I'm not buying any more.

[winner69]

Back over 7 bucks

I reckon this time it will push on to 750 / 800

Pity Carl’s Jnr is a bit of a dog.

[Beagle]

Back over 7 bucks

I reckon this time it will push on to 750 / 800

Pity Carl’s Jnr is a bit of a dog.

This hound has tried to like his local dog. When they first opened it was great, enthusiastic staff, piping hot chips and very tasty burgers.
The last four times I have been in recent months its always the same. I get disinterested staff who appear to have low morale, lukewarm fries but the burger is still good.
It matters not whether I bark about making sure the fries are fresh and hot at the time of the order or not, they don't seem to want to understand. Lukewarm fries it is every time and of course I go back up and bark about it then it takes so long to get fresh hot fries the burger is lukewarm.
Is it really so hard to ensure the fries and burger are fresh and hot ?...apparently it is.
The last straw was taking the condiments extra's away so you can't dress up your burger with extra's and oh yes, they put the prices up as well.
Less food for more money with shoddy service and lukewarm fries...no point in me going again, I know how that movie play's itself out every single time...
As for the dog food they serve at KFC..well lets just say I wouldn't feed it to my dogs. Obviously there is money in rubbish, this company proves it !

[JeremyALD]

I have a very small share now in RBD after selling around these levels. A foreward PE of 22 seems very expensive to me and there are certainly some risks.

[mondograss]

Anyone have a view on RBD making an opportunistic play for ASX.RFG? They’re certainly getting punished at the moment (and not without reason, but there are some good brands there).

[hardt]

Anyone have a view on RBD making an opportunistic play for ASX.RFG? They’re certainly getting punished at the moment (and not without reason, but there are some good brands there).

I bloody well hope not.

800+ bakeries and 1300+ cafes ... No thanks.

Let RBD carry on selling fried garbage for massive profits...

What would really get me excited would be RBD merging with Collins Foods CKF which would consolidate a lot of KFC operators under one hutt.

disc hold

[winner69]

Anyone have a view on RBD making an opportunistic play for ASX.RFG? They’re certainly getting punished at the moment (and not without reason, but there are some good brands there).

Jeez that RFG still getting hammered ....another 25% today on top of recent carnage

[winner69]

I bloody well hope not.

800+ bakeries and 1300+ cafes ... No thanks.

Let RBD carry on selling fried garbage for massive profits...

What would really get me excited would be RBD merging with Collins Foods CKF which would consolidate a lot of KFC operators under one hutt.

disc hold

RBD tend to operate company owned stores (quite a few PH run by franchisees but they were dogma as company owned stores)

Seems the RFG franchise is beyond redemption - screwed franchisees into the ground so much hardly a business left.

I would want RBD even entertaining the idea.

[JeremyALD]

Jeez that RFG still getting hammered ....another 25% today on top of recent carnage

Over 40m of shares traded today too. The market cap is now only 360m!!! They are in big trouble. Great journalism by Sydney morning herald I must say.

[winner69]

Over 40m of shares traded today too. The market cap is now only 360m!!! They are in big trouble. Great journalism by Sydney morning herald I must say.

A bit like what Veritas are doing to Mad Butcher franchisees .....ok for HQ until the operators throw in the towel.

[mondograss]

A bit like what Veritas are doing to Mad Butcher franchisees .....ok for HQ until the operators throw in the towel.

It certainly seems that the new CEO will have to back off the profits big time to get the franchisees back in the black and rebuild some confidence. Clearly Alford screwed them for all they're worth. It has to be said though that those struggling franchisees hoping to sell out and move on are now completely stuffed, virtually no hope anyone will buy them. Maybe RFG should buy them out as company owned stores and put some skin in the game. Anyway, not relevant to RBD really as you say it's a different model, I was just looking at the brands and thinking that gourmet pizza and cafes with a decent selection of food might sit well alongside Pizza Hut and Starbucks without really competing too much for the same dollar.

[winner69]

Wow - nearly half the brokers who lixtdd their picks in The Herald picked RBD in their top five. The most picked of all the stocks

Probably a bad sign

[sonny n share]

Last year the most picked was fph?

[hardt]

When there is such a monumental consensus from the brokers on a business... just buy in, because you know others will be doing the same..

[Plus, everyone already knows RBD is excellent anyway]

[winner69]

When there is such a monumental consensus from the brokers on a business... just buy in, because you know others will be doing the same..

[Plus, everyone already knows RBD is excellent anyway]

all good then

Never found a reason to sell over the last 10 years ... a seven bagger now

The line will just keep going up and up ..... 8 bucks .... 9 bucks ...10 bucks

When is Taco Bell going to be big in NZ

[artemis]

A bit OT but I have just gifted 1000 RBD shares to a family member for a 21st birthday present. It came with only one condition, and that is they have to allow me to give them a brief financial literacy lecture from time to time! We started with a run through the recent market update and a look at the two and 5 year graphs. Wide eyes at the graphs!

I chose this stock for obvious interest reasons, including good divvies and a free lunch, two if they come to the ASM. Explained DRiPs too.

Baby steps ....

[LAC]

A bit OT but I have just gifted 1000 RBD shares to a family member for a 21st birthday present. It came with only one condition, and that is they have to allow me to give them a brief financial literacy lecture from time to time! We started with a run through the recent market update and a look at the two and 5 year graphs. Wide eyes at the graphs!

I chose this stock for obvious interest reasons, including good divvies and a free lunch, two if they come to the ASM. Explained DRiPs too.

Baby steps ....
Wow, that is a really really good way of getting them into shares. I might try this approach with family as well. It is also good to note that in the Herald article this morning 3 of the brokers have picked RBD for 2018;)

[whome]

Great move Artemis to get young family members investing. I like the choice of company where they get to carry out their own quality control on products and can monitor marketing effectiveness. Will also take an added interest in the location of new store openings. Nice one!!

[artemis]

Great move Artemis to get young family members investing. I like the choice of company where they get to carry out their own quality control on products and can monitor marketing effectiveness. Will also take an added interest in the location of new store openings. Nice one!!

Thanks! When we walked through the market update there was instant feedback - good (KFC), bad (Pizza Hutt), huh? they own Starbucks?, when is CarlsJr coming to Wellington.

I suggested he come along to the next ASM in Wellington and ask some questions. And that there is a good chance a couple of the board and management will have a chat to him afterwards, since he is a key target demographic for them. Unlike most attendees.

[hardt]

all good then

Never found a reason to sell over the last 10 years ... a seven bagger now

The line will just keep going up and up ..... 8 bucks .... 9 bucks ...10 bucks

When is Taco Bell going to be big in NZ

Just one of those set and forget picks ... FPH/RBD/ABA imo

[Beagle]

I can remember the dark days when this was an underperforming flea ridden dog...apparently now everything is fine and dandy and the company can do no wrong.
http://www.4-traders.com/RESTAURANT-BRANDS-NEW-ZEA-6492062/financials/ Brokers all seem to like it but a note of caution, average 12 month target price is $7.09, less than the current $7.30.

[winner69]

I can remember the dark days when this was an underperforming flea ridden dog...apparently now everything is fine and dandy and the company can do no wrong.
http://www.4-traders.com/RESTAURANT-BRANDS-NEW-ZEA-6492062/financials/ Brokers all seem to like it but a note of caution, average 12 month target price is $7.09, less than the current $7.30.

Your new year resolution should be to wean yourself off this thing called 4-traders and average brokers targets. You know they are rubbish ...being guided by them will get you into trouble (missing opportunities and getting too comfortable with the outrageously high ones)

Jeez they show brokers average target for SUM is $5.63 ....about the current price eh

[couta1]

I can remember the dark days when this was an underperforming flea ridden dog...apparently now everything is fine and dandy and the company can do no wrong.
http://www.4-traders.com/RESTAURANT-BRANDS-NEW-ZEA-6492062/financials/ Brokers all seem to like it but a note of caution, average 12 month target price is $7.09, less than the current $7.30. Held it quite a few years ago when it was $3 odd, has had a great run that's for sure, but at current price certainly not a set and forget as hardt suggests IMO. Wouldn't be interested in holding RBD or FPH at their current prices, the biggest gains have come and gone(Unless your a very long term holder) as opposed to the likes of A2, which could add another 50% to it's SP this year.

[value_investor]

I like this one but only because its hard for me to not eat KFC when I drive past it! cheap and easy but not the best feeling afterwards!

A little bit surprised that all the brokers have put this one at the top of the list considering the valuation is already so high for it. I feel like a lot of the upside is already priced in.

Also looking at the business its a bit startling how much KFC is the golden goose. Not saying it is a bad thing, but I remember growing up and eating McDonalds all the time. Doesn't get as much of a second look anymore only when I'm desperate and want reminding why I don't. Doesn't look like its cool with the hipster kids anymore too https://news.avclub.com/only-1-in-5-millennials-have-tried-a-mcdonald-s-big-mac-1798252742

Just saying tastes change very quickly these days, can't see me falling out with fried chicken anytime soon yet!

[Beagle]

So...I deleted my weekend rant about how bad this stuff is for you and your arteries. John Ryder said in a recent newsletter protein is where the action is at and chicken is cheep cheep, excuse the corny pun. The fact is this stuff is very cheap and that's why people buy it and if they want to get fat on it and clog their arteries that's not my problem. Three brokers can't all be wrong...probably at least give a market performance this year so I dipped my toe in the water this morning.

[percy]

So...I deleted my weekend rant about how bad this stuff is for you and your arteries. John Ryder said in a recent newsletter protein is where the action is at and chicken is cheep cheep, excuse the corny pun. The fact is this stuff is very cheap and that's why people buy it and if they want to get fat on it and clog their arteries that's not my problem. Three brokers can't all be wrong...probably at least give a market performance this year so I dipped my toe in the water this morning.
Really.?
A case of do as I do,not as I say?

[Beagle]

People need to take personal responsibility for their diet, health and wellbeing. Not my job or yours. Its not a pure sin stock like a weapons manufacturer, gambling, alcohol or tobacco but there are elements of it I don't like and certainly the death rate from heart disease and clogged arteries is alarming...but people buy cars and they get killed so there's a lot of grey area's when it comes to whether an investment is ethical and this is one of those cases. One of my most respected religious elders has RBD shares and doesn't seem to have an ethical issue with them and he's a lot wiser about such issues than this hound.

[percy]

Unfortunately too many religious people do not let their morals get between them and a dollar...lol.

[macduffy]

Touche! percy!

It's so hard to determine what differentiates a fringe sin stock from a "real" sin stock, isn't it! I don't hold RBD, but only because I missed the bus there, not being convinced that buying into Hawaiian pizza was a great idea.

[percy]

Touche! percy!

It's so hard to determine what differentiates a fringe sin stock from a "real" sin stock, isn't it! I don't hold RBD, but only because I missed the bus there, not being convinced that buying into Hawaiian pizza was a great idea.

I sold mine on the Hawaiin deal,however, luckily the trust I help out on did not.
ps.I think each of us have to decide for ourselves moral issues. I do worry about HBL and TRA making credit too easily available, to people who should not be taking on debt, for consumer products.Then if they don't have a car they can't get to work?
Best left for "off market discussion." That way we will be spared the rants...lol.

[Beagle]

So many grey area's, banks making unsecured loans too easy, airlines creating too much pollution, soft drink makers making too many sugary drinks. As a quick and easy meal once every so often fried chicken, pizza or Carl's Jnr isn't going to kill you, well not much earlier than anything else lol.

I go to Carl's Jnr every now and again. The burgers are consistently exceptionally good, unfortunately our closest outlet has yet to learn how to deliver hot fries with their burgers. Maybe if I am really dogmatic and insistent about the latter when placing my order it might make a difference.

[artemis]

Grey areas? What about Personal Responsibility then? Don't borrow more than one can afford to repay. Choose to eat and drink healthy-ish.

Quaint old fashioned notion, I know.

[couta1]

Grey areas? What about Personal Responsibility then? Don't borrow more than one can afford to repay. Choose to eat and drink healthy-ish.

Quaint old fashioned notion, I know. Yes exactly, personally I don't eat KFC very often because it's fat content by the time you've polished off a half a dozen pieces is stratospheric. Unfortunately the ones that consume the most of this product already have a low life expectancy,and I don't see things changing anytime soon. Not a Sin stock when compared to SKC ,as eating RBD products doesn't normally lead to marriage/family breakdowns or suicides etc. PS-Wouldnt buy SKC if it was the best value play on the market, if fact I wouldn't even accept any as a gift.

[Beagle]

Had a nice Pizza from Pizza hut for dinner to celebrate my new investment, not dead yet lol

[blackcap]

Had a nice Pizza from Pizza hut for dinner to celebrate my new investment, not dead yet lol

Was it actually nice though Beagle? I make my own pizza and would not go back to the take out joints if I did not have to.... :)

[Baa_Baa]

Was it actually nice though Beagle? I make my own pizza and would not go back to the take out joints if I did not have to.... :)

They are bloody awful pizza's with anything meaty dripping with preservatives and the veggie's sparse on top of preserved sauces. You could make a better pizza for a fraction of the price in a much shorter time. But it is convenient if you don't mind the drive, or paying a premium for delivery. Sadly take away Pizza is an expensive luxury masquerading as a cheap fast food, but it's got the masses confused enough so RBD should continue to do very well until the enlightened overcome the ignorant. Which isn't happening anytime soon by the looks of it.

[winner69]

I have a couple McCains ultra Thin Angus Beef pizzas in the freezer for emergencies or when feeling lazy.

About $5/$6 from New World and 10 minutes in the oven and dinner ready (with a green salad of course). Pretty good pizza for the effort

Pepperoni one quite nice as well.

Best pizzas in Naples though.

[Beagle]

Was it actually nice though Beagle? I make my own pizza and would not go back to the take out joints if I did not have to.... :)

It was pretty good for a quick easy feed for a change. Did some shopping while I waited for it to be cooked. Granddaughter liked her's, Mrs Beagle had something healthier. I'll probably have a crook tummy tomorrow lol. Very reluctant to eat that greasy fried chicken at KFC though. Carl's Jnr do make excellent burgers, that would be my pick of the best of the KFC empire but couldn't be bothered driving that far tonight.

[percy]

Had a nice Pizza from Pizza hut for dinner to celebrate my new investment, not dead yet lol

Have you recovered yet.?
Are you selling your shares today,or leaving that until you are fully recovered?.................lol.

[winner69]

I sold mine on the Hawaiin deal,however, luckily the trust I help out on did not.
ps.I think each of us have to decide for ourselves moral issues. I do worry about HBL and TRA making credit too easily available, to people who should not be taking on debt, for consumer products.Then if they don't have a car they can't get to work?
Best left for "off market discussion." That way we will be spared the rants...lol.

Was the wrong time to sell eh

RBD get to the stage where one thinks the share price can't do that much better ...but then they come out and announce the next big growth initiative

Chart says it all ---- red dots when this has happened --- taken share price to a new level (intuitively this should happen eh)

Wonder what it will get too when/if they say Taco Bell going to be big in NZ

[percy]

Was the wrong time to sell eh

RBD get to the stage where one thinks the share price can't do that much better ...but then they come out and announce the next big growth initiative

Chart says it all ---- red dots when this has happened --- taken share price to a new level (intuitively this should happen eh)

Wonder what it will get too when/if they say Taco Bell going to be big in NZ

Most probably will hit $10.
The proceeds from my RBD sale have not been sitting idle ,so it always depends where to allocate the recycled funds.
I have always been a successful recycler.............lol.

[Beagle]

Have you recovered yet.?
Are you selling your shares today,or leaving that until you are fully recovered?.................lol.

Still alive and kicking but the weight scales suggest this was a bad idea...rabbit food for tea tonight lol

[Gonzo]

Still alive and kicking but the weight scales suggest this was a bad idea...rabbit food for tea tonight lol
If TV adds during cricket and rugby league increase profits then should be able to retire on this one

[winner69]

Good solid numbers

On track to that $1 billion sales target

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/RBD/315261/275920.pdf

[ninetiger]

I just dont understand why rdb share price drop after the report today? Is there something not good in the report? https://www.nzx.com/announcements/316849

[LAC]

EPS not as good as the other bits on the report maybe.

[blackcap]

I just dont understand why rdb share price drop after the report today? Is there something not good in the report? https://www.nzx.com/announcements/316849

Report reads great. Just maybe not great enough. Expectations and all that....

[artemis]

Taco Bell coming ...

https://www.stuff.co.nz/business/103164636/fast-food-operator-restaurant-brands-to-open-taco-bell-in-nz-in-not-too-distant-future

[hardt]

24x Earnings for such a pretty picture is worth it IMO... top up time is certainly coming.

[hardt]

Solid looking investor pack... glad I doubled down on the cheap ones :)
Looks like there are plenty of buyers out there as well.

[Lewylewylewy]

I set taco bell as a big risk. I think the growth story is less attractive moving forward. I'd love to be wrong though. I'm out a while back

[winner69]

Somebody said I should sell when they were 715

Glad I didn’t listen

Be $9 by end of year

[LAC]

Somebody said I should sell when they were 715

Glad I didn’t listen

Be $9 by end of year

Wow thats a big call. I just sold out:(

[winner69]

Wow thats a big call. I just sold out:(

Time to sell now its $1 a friend said

Time to sell now its $2 a friend said

Time to sell now its $3 a friend said

Time to sell now its $4 a friend said

If you dont sell at $5 you are a mug a friend said

C'mon sell at $6 you stupid moron a friend said

Should sell now at $7.15 was the latest advice

Always resisted the temptation (admit I have sold a few but not many)

Maybe I'll get advised again at $8 ha ha and again at $9 and again at $10

[LAC]

Time to sell now its $1 a friend said

Time to sell now its $2 a friend said

Time to sell now its $3 a friend said

Time to sell now its $4 a friend said

If you dont sell at $5 you are a mug a friend said

C'mon sell at $6 you stupid moron a friend said

Should sell now at $7.15 was the latest advice

Always resisted the temptation (admit I have sold a few but not many)

Maybe I'll get advised again at $8 ha ha and again at $9 and again at $10

Haha, RBD was good to me over the years but thought SUMthing else will be better for the next few years. Lets see how it plays out, if RBD drops below 7's again I will step back in I guess

[winner69]

Haha, RBD was good to me over the years but thought SUMthing else will be better for the next few years. Lets see how it plays out, if RBD drops below 7's again I will step back in I guess

Fair enough.

At current price I wouldn’t be buying and there’s no real compelling reason to sell since it’s been so good to me.

And on the way some calculate divie yields I’m getting a 30% plus divie ...Pretty good eh

[winner69]

Should see 8 bucks tomorrow ....or the day after

Then heading on upwards to 9 bucks

[winner69]

Close above 8 bucks

That’s so cool

Suppose need to hold until it reaches 9 bucks

[JayRiggs]

Worth holding at least 1 single share for life, just for the free annual KFC voucher :p
The day they stop giving the vouchers, I'm out.

[artemis]

Worth holding at least 1 single share for life, just for the free annual KFC voucher :p
The day they stop giving the vouchers, I'm out.

Heh! The kids get RBD shares from me for their 21st birthdays.They are in return required to read at least a couple of market updates a year. All part of the education. The voucher helps, plus the brands mean something to them.

[moimoi]

@ Winner69

Assuming the Divi were to continue is there any point selling them at all when returning 30% p.a? (tough to replicate that sort of annual return unless one's name is Madoff....:-))

[Elles]

@ Winner69

Assuming the Divi were to continue is there any point selling them at all when returning 30% p.a? (tough to replicate that sort of annual return unless one's name is Madoff....:-))

Not 30% at today's price though, so somewhat irrelevant imo.

[Maverick]

Heh! The kids get RBD shares from me for their 21st birthdays.They are in return required to read at least a couple of market updates a year. All part of the education. The voucher helps, plus the brands mean something to them.

what the kids hear....
Blah blah blah.....RBD shares from me .......blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah ..........voucher .......blah blah blah blah

[glennj]

Fair enough.

At current price I wouldn’t be buying and there’s no real compelling reason to sell since it’s been so good to me.

And on the way some calculate divie yields I’m getting a 30% plus divie ...Pretty good eh

I know what you are saying! My average buy in price is 2.56 but I would not buy more at current multiples. This has been my third best share over the last decade or so as far as annualised total returns go. The div yield based on original purchase price is very nice and even at around current buy price the div yield is close to 5%. Basically I don't see much worth buying at the moment on the NZ market so will hold this investment and watch to see how it continues to track.

[artemis]

what the kids hear....
Blah blah blah.....RBD shares from me .......blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah ..........voucher .......blah blah blah blah

Partly true! But we are talking young adults with plans for the future. I have told them what they do is their decision and if they want to sell and lie on the beach in Bali for a few weeks that is their choice. Hasn't happened so far.

I am ever hopeful of financial education by osmosis to avoid 'shirtsleeves to shirtsleeves in three generations'.

[blackcap]

Hello all RBD fans.

I hope to attend the AGM tomorrow morning at the James Cook in Wellington.

This is a bit late notice, but is there anyone that has any questions for the directors? I am happy firing them (within reason) out on your behalf.

I may make a small summary of the AGM tomorrow afternoon if anything of note or interest was mentioned.

Cheers!

[Scooter]

Hello all RBD fans.

I hope to attend the AGM tomorrow morning at the James Cook in Wellington.

This is a bit late notice, but is there anyone that has any questions for the directors? I am happy firing them (within reason) out on your behalf.

I may make a small summary of the AGM tomorrow afternoon if anything of note or interest was mentioned.

Cheers!

Why was the shareholder free meal not a double down burger, which was the promotion at the time :)

[blackcap]

Why was the shareholder free meal not a double down burger, which was the promotion at the time :)

Haha I may if feeling in the right mood, could cause a bit of consternation at the table.!! :)

[Scooter]

Haha I may if feeling in the right mood, could cause a bit of consternation at the table.!! :)
Cheers for that.

Seriously though, they are looking to expand into L.A., how difficult do they see the market there, and will the prices support the margins they are looking to achieve?
With Carl's Jnr, continuing sales seems to be an issue, is this due to marketing, or price point?, and what are their plans to remedy this?
Cheers

[LAC]

Thanks, we all know Taco Bell will eventually get here, do they know when that would be?

[JeremyALD]

Like the question around Carl's Jnr. I also don't understand why they are constantly closing Star Buck stores. The one in Auckland CBD metro was so busy all the time and they closed it.

[JeremyALD]

Thanks, we all know Taco Bell will eventually get here, do they know when that would be?

Also how do they ensure its not another Carl's Jnr!

[Timesurfer]

After partaking of the free meal at our local KFC I am pleased I sold out - there is at least one store that is on a hiding to nothing judging from the product quality and levels of service.

[blackcap]

After partaking of the free meal at our local KFC I am pleased I sold out - there is at least one store that is on a hiding to nothing judging from the product quality and levels of service.

Which one is it Timesurfer? And what were the issues with service? I am sure directors would be happy to know. One store does not make a company and historically levels of service have been low at RBD stores yet they still keep churning out great profits and dividends.

[Scooter]

After partaking of the free meal at our local KFC I am pleased I sold out - there is at least one store that is on a hiding to nothing judging from the product quality and levels of service.

Interesting, I used my free meal voucher yesterday in Napier, one order taker, so small line, waited 3 mins to be served, big orders being placed in front of me, 2 people ordering the big bucket meal $35. My order taker was polite, knew how to process the voucher, was allowed to ask for specific pieces as well. When order was ready, she knew it was mine and I found the whole experience reasonable. HOWEVER, Napier does not have the best reputation for KFC quality, and the chicken breast was dry and a bit tough, the rib was perfect, chips were good, but potato and gravy could be missed.

So, seeing the money being spent in a so so restaurant, I can see why this company does well.

[winner69]

Which one is it Timesurfer? And what were the issues with service? I am sure directors would be happy to know. One store does not make a company and historically levels of service have been low at RBD stores yet they still keep churning out great profits and dividends.

There is a saying that ones business is only as good as its worst employee

Or in this case maybe RBD is only as good as it’s worst store

But as long as that worst store doesn’t get worser I’ll hold

[Rep]

Like the question around Carl's Jnr. I also don't understand why they are constantly closing Star Buck stores. The one in Auckland CBD metro was so busy all the time and they closed it.

As noted in the third quarter sales release in December 2016:

“...end of lease closure of the Aotea Square store in Auckland.”

Even if a store is busy it doesn’t mean it’s immune to costs or indeed the end of the lease.

[blackcap]

Thanks, we all know Taco Bell will eventually get here, do they know when that would be?

Not for a while was the answer at the AGM. "Not soon". "It takes time to introduce a new brand, it takes patience".
Taco Bell are also cautious about entering new markets.

[blackcap]

Cheers for that.

Seriously though, they are looking to expand into L.A., how difficult do they see the market there, and will the prices support the margins they are looking to achieve?
With Carl's Jnr, continuing sales seems to be an issue, is this due to marketing, or price point?, and what are their plans to remedy this?
Cheers

They acknowledged that Carls Jnr was difficult but emphasised patience and that it takes time for a totally new brand to be ingrained. They do believe in the Flavor Profile and Carls Jnr. Also said that they got some of their store placements wrong but were looking to rectify that. Not going to cut it just yet as they believe it will work, they have changed the menu, sizing etc and encouraging to see EBITDA doubled from last year to $2m but obviously still not good enough. Carl's Jnr may be coming to Wellington sometime soon.

Hawai has taught them and they have learned a lot and that will help with a potential move to Western USA. Directors did stress they would look to acquire a potential KFC or Taco Bell, sticking to what they know etc.

KFC Wellington, Courtney place opening soon!

[LAC]

Thanks blackcap for the updates, much appreciated.

What was on offer for refreshments this year....

[blackcap]

Thanks blackcap for the updates, much appreciated.

What was on offer for refreshments this year....

Well yes I had more questions, but during another persons questions some in the crowd started getting rather heated "hurry up we are here for lunch" type of rhetoric. So I thought better of it and asked the questions personally post meeting. Um there were slices of pizza and unlimited amounts of KFC chicken. (no chips unfortunately) (and plenty of coffee too but not sure if that was starbucks)

[Timesurfer]

Hi Blackcap,

I fully agree, that it is probably not a reflection on the whole company and I originally bought in because I like the direction they are heading globally. However, I got hungry for better returns so moved my meager shareholding to other companies (which may or may not be performing better!).

Not sure I should publically slam a particular store, but it was in the top of the South Island. There were only 2 customers infront of me, and it took ages to get served as they got one of the orders in front of me wrong, one of the drive though orders also came in wrong while I was standing there.
The quality of the food was not great, with the chicken very greasy but the batter very dry and hard (as mentioned by someone else), and the potatoe and gravy was mostly flour and water, the chips were cold. Just generally the food was not handled well and the floor was a mess.

Perhaps I am just getting fussy with my food in my old age, I know other people that love to eat there.

[winner69]

Thanks blackcap

Obviously $43m/$45m profit F19 not cutting for punters with shareprice down nearly 2% today

It’ll recover though and be back over 8 bucks soon

[blackcap]

Thanks blackcap

Obviously $43m/$45m profit F19 not cutting for punters with shareprice down nearly 2% today

It’ll recover though and be back over 8 bucks soon

The directors did come out too and say they were targeting $1b sales (a $1 billion company) was there thing and then later the chair started talking about $1.5b. I asked the directors later that growth and sales is all good, but please keep in mind that as a S/H I am only really interested in EPS. With EPS currently at 29 cents the $8 may look a bit toppy. One of the directors was not so concerned about EPS, he was all about the growth, another I talked to was a lot more circumspect about EPS accretion being important when evaluating any potential acquisition, be it synergy potential or other.

[jg8512]

Thanks blackcap

Obviously $43m/$45m profit F19 not cutting for punters with shareprice down nearly 2% today

It’ll recover though and be back over 8 bucks soon

while the guidance was a little under expectations (of $46m) - I think that might just be good expectations management - some of the commentary was very positive. eg

"the company has never been stronger. "

" We have a very clear strategy for growth, we have executed the first phase of that strategy and we are poised for further expansion"

the billion dollar revenue target, and the plans for $1.5 billion, which Blackcap mentions.

Given the strong cash flows the business generates, I think plenty of that growth should enhance eps. the Hawaii etc acquisition provides the platform for strong eps growth imho, as they can improve trading (as they did on the NZ KFC stores thru store redevelopment) and add new stores at low incremental cost financed from operating cash flow (as they are doing in the Aus KFC chain)

[sirjosh50]

Thinking of sinking $1000 in shares (I know it's relatively not that much) as my first investment. I remember doing an 8000 word analysis on all of the ratios etc for NCEA Level 3 last year which led me to consider investing in Restaurant Brands.

[artemis]

Thinking of sinking $1000 in shares (I know it's relatively not that much) as my first investment. I remember doing an 8000 word analysis on all of the ratios etc for NCEA Level 3 last year which led me to consider investing in Restaurant Brands.

They have a positive growth story which has paid off for them over the last couple of years. They also have a DRiP which gives you the equivalent of compound interest. They cycle the annual shareholder meetings between Auckland, Wellington and Christchurch, unlike many companies. And there's the free lunch voucher each year.

[blackcap]

it was the most widely picked stock at the beginning of the year when they polled all of the major brokers. Not exactly a 'health-conscious' company, but it will almost certainly continue to go up.

Just out of curiosity, what does "health-conscious" have to do with anything? Investing is about making a return on capital surely?

[Jonboyz]

I wonder whether Taxinda will introduce a 'Junk food tax'? Apparently, Mexico and Hungary have 4-8% tax on 'junk foods' with great sucess - https://www.vox.com/2018/1/17/16870014/junk-food-tax

Anyways, I think RBD is still a great company and am slowly increasing my holdings in it.

[sonny n share]

‘Chicken is where it's at’: the unstoppable rise of KFC


KFC has survived health scandals, veganism and a major delivery fail: can the fast food behemoth stay on top?


https://www.theguardian.com/food/2018/aug/18/chicken-is-where-its-at-the-unstoppable-rise-of-kfc


There are 1,158 comments

[Bjauck]

I wonder whether Taxinda will introduce a 'Junk food tax'? Apparently, Mexico and Hungary have 4-8% tax on 'junk foods' with great sucess - https://www.vox.com/2018/1/17/16870014/junk-food-tax

Anyways, I think RBD is still a great company and am slowly increasing my holdings in it. Won't "Taxinda" be good for RBD? Even if a junk food tax is introduced here, and Labour tax policies actually result in a redistribution of wealth to poorer families - wouldn't that increase the spending power of a prime market for fast food sellers?

[Antipodean]

Thinking of sinking $1000 in shares (I know it's relatively not that much) as my first investment. I remember doing an 8000 word analysis on all of the ratios etc for NCEA Level 3 last year which led me to consider investing in Restaurant Brands.

Nothing wrong with starting at amounts you are comfortable with, and good on you for doing the research and taking the plunge while young. My first investment was also $1000 back in 2014 and it served me well.

[Te Whetu]

Nothing wrong with starting at amounts you are comfortable with, and good on you for doing the research and taking the plunge while young. My first investment was also $1000 back in 2014 and it served me well.

Agreed, starting small is not an issue.

I personally started with roughly $400 into each of 42 Below and Nuplex, quite a few years ago.

Starting small may not be cost effective from a brokerage point of view. However, it is very beneficial when you consider the knowledge gained from putting some money on the table and following/learning from your decisions.

My initial investments had their ups and downs, but overall one of the best decisions I have ever made (investing, rather than the specific companies).

Good luck Sir Josh.

Te

Disc: no longer hold any RBD shares

[winner69]

Getting rid of Starbucks will help overall Group performance

Good move

Pity Carl’s Jnr is a bit of dog brand

https://www.nzx.com/announcements/323192

[Jay]

I liked this bit in the announcement "...stronger emphasis on its core quick service restaurant brands..."
Can't say I ever come across a quick service outlet of KFC (not that I go that often), they seem to be the slowest of any of the fast food "restaurants" in my experience, whether you are the only person ordering or 5th (or more) in line

[jg8512]

so if I understand it correctly they get up to $4.4m for Starbucks, for a minor adverse impact on the current year net profit (excluding non-trading items) result of approximately $1.3 million. So, Starbucks earns circa $1.3m NPAT per annum? And RBD sold it for $4.4m

The May 2018 presentation showed Starbucks had $25.8m of revenues, and $4.8m of EBITDA (and $4.8m and $4.4m in FY17 and FY16).

Tahua have got themselves an absolute bargain.

And don't get me started on comparing the price RBD achieved with what Cooks are paying for Mojo!

Next step ... a companies office search to find it who is behind Tahua Capital - aka the thieving bandits!

[Beagle]

Quite bizarre. It looks like they literally gave it away ?

[winner69]

so if I understand it correctly they get up to $4.4m for Starbucks, for a minor adverse impact on the current year net profit (excluding non-trading items) result of approximately $1.3 million. So, Starbucks earns circa $1.3m NPAT per annum? And RBD sold it for $4.4m

The May 2018 presentation showed Starbucks had $25.8m of revenues, and $4.8m of EBITDA (and $4.8m and $4.4m in FY17 and FY16).

Tahua have got themselves an absolute bargain.

And don't get me started on comparing the price RBD achieved with what Cooks are paying for Mojo!

Next step ... a companies office search to find it who is behind Tahua Capital - aka the thieving bandits!

RBD don’t ‘own’ the Starbucks franchise, its not there’s to ‘sell’

They are only selling the fixed assets and stock in the stores ..might look cheap but probably a bit old. New owners going to spend a bit of money to upgrade stores


Hopefully no issues transferring all the leases to make a clean break

With this Tahua taking over the Starbucks franchise and the staff (obligations) and the leases a nice clean exit by RBD ..well done Russel

[jg8512]

RBD don’t ‘own’ the Starbucks franchise, its not there’s to ‘sell’

They are only selling the fixed assets in the stores ..might look cheap but probably a bit old. New owners going to spend a bit of money.


Hopefully no issues transferring all the leases to make a clean break

Well they're giving up $1.3m NPAT and $4.8m of EBITDA. In return they get $4.4m. that's not much a trade for mine.

Why did RBD get out?

[jg8512]

Well they're giving up $1.3m NPAT and $4.8m of EBITDA. In return they get $4.4m. that's not much a trade for mine.

Why did RBD get out?

is there some big ramp up in the franchise fees payable to Seattle?

[winner69]

Well they're giving up $1.3m NPAT and $4.8m of EBITDA. In return they get $4.4m. that's not much a trade for mine.

Why did RBD get out?

Taken them 20 years or so to build the business up to $1m profit .....maybe that answers your question

Seattle have been the winners

Let RBD put the resources and effort into things that will probably do better

[winner69]

is there some big ramp up in the franchise fees payable to Seattle?

Maybe ...it’s been a 20 year agreement

[Beagle]

Maybe ...it’s been a 20 year agreement

I would say that's the answer. Owners looking to turn the screws tighter on the franchisee's when the agreement comes up for renewal. Pretty much a given with corporate greed these days. Might be time for diligent shareholders to check when the next lot of corporate thuggery will hit RBD's operations with the next master franchise agreement renewal...

[LAC]

I know of a couple stores that would be needing new leases, I would imagine that would be very costly as these malls have been significantly renovated and revamped so they would want a decent $ for rent.

[Snoopy]

Tahua have got themselves an absolute bargain.

And don't get me started on comparing the price RBD achieved with what Cooks are paying for Mojo!

Next step ... a companies office search to find it who is behind Tahua Capital - aka the thieving bandits!


When Starbucks came to NZ, the idea was to bring the 'Starbucks' on every corner kind of mega coverage to the NZ café scene. Leases were taken out willy nilly to get maximum footprint coverage. There was no need to analyse how popular each location would be. The Starbucks on one block would be the de-facto billboard for the next. It was all about getting the name to be ubiquitous. The idea was that Starbucks would become so synonymous for coffee that NZers would just go to Starbucks for their coffee hit without thinking. What RBD didn't realise was that unlike the US where the coffee in general is dreadful, and so Starbucks is an oasis, the coffee culture in NZ is much more sophisticated and the competitive products are much better. So Starbucks in NZ had real competition, and not every NZ coffee drinker wanted to sing 'Yankee Doodle Dandee' as they quaffed down their morning cuppa.

Rather than being the all conquering brand, Starbucks has retreated to become a niche player. The all conquering dream ended probably a decade ago, and Starbucks were left to work through their expensive multi year lease deals. The jettisoning of Starbucks makes sense. It doesn't really fit with the other quick service meal outlets in the RBD portfolio and there must be few supply line synergies that will be lost by getting rid of them. RBD is, these days, about maximising the return from their capital. And a small coffee store in a high rent mall selling 'bits and pieces' does not compare well with a purpose built restaurant rented for a comparative peppercorn with much better cashflow. At least the disposal of Starbuck simplifies the business, decreasing the skill set required to be a director which will in turn flow through to lower directors fees in the future.

SNOOPY

discl: Just one of the sentences in my little diatribe above is a bare faced lie. I will leave it to the discerning reader to figure out which sentence it is!

[Nice Option]

"Auckland-based Tahua was established specifically for the purpose of acquiring the assets of Starbucks New Zealand.
Its owners have experience in other multi-site hospitality businesses including The Better Bar Company and Maestro Cafes."

Source: http://www.sharechat.co.nz/article/a0c48430/restaurant-brands-exits-starbucks-coffee-chain-sells-assets-to-local-buyer-for-4-4m.html

Veritas?

They wont be meddling in the cafe scene, I can tell you that much !

[jg8512]

I would say that's the answer. Owners looking to turn the screws tighter on the franchisee's when the agreement comes up for renewal. Pretty much a given with corporate greed these days. Might be time for diligent shareholders to check when the next lot of corporate thuggery will hit RBD's operations with the next master franchise agreement renewal...

from what I'm hearing it sounds as though it was a double whammy ... more onerous licence agreements significantly reducing profits to RBD ... and an obligation to open more stores (Tahua committed to 50).

I had a look for the terms of the remaining existing franchise agreements with Yum. Pizza Hutt NZ got renewed for 10 years in mid-2018; I think KFC NZ still has 8 years to run on the 2006 deal, and I think there was a circa 10 yr deal with Yum when they bought Hawaii et al. KFC Australia - I'm not sure. I think it might be short - low intangibles on balance sheet - so that might be the one to worry about if Yum was to take advantage of its exit from store ownership in Australia to make more demands of its franchisees.

[winner69]

RBD need to select and monitor their Pizza Hut franchisees a bit better

https://www.stuff.co.nz/nelson-mail/news/107155010/exploitative-employer-fined-150k-sentenced-to-community-work

[winner69]

Sales not entirely booming. Headline number looks good but includes Aust KFC new stores

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/RBD/324105/287081.pdf

[percy]

Sales not entirely booming. Headline number looks good but includes Aust KFC new stores

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/RBD/324105/287081.pdf

Not down though.!

[Patient Panda]

I only see positive same store salesin every region and its an extremely competitive market place for what they sell. I’d be pretty happy with that

Question i s how are they allowed to open dtores in Aus? I thought another cimpany on the ASX had the license agreement for that?

[Scooter]

I only see positive same store salesin every region and its an extremely competitive market place for what they sell. I’d be pretty happy with that

Question i s how are they allowed to open dtores in Aus? I thought another cimpany on the ASX had the license agreement for that?
They purchased them from a franchise owner that was selling them

[winner69]

A bit of action

Is $9,45 enough icing on the cake to tempt me?

Maybe it is seeing many say the share market is about to collapse in one big heap

Under a buck seems so long ago

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/RBD/325456/288806.pdf

[blackcap]

A bit of action

Is $9,45 enough icing on the cake to tempt me?

Maybe it is seeing many say the share market is about to collapse in one big heap

Under a buck seems so long ago

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/RBD/325456/288806.pdf

Might sell mine if they get above $8.70 on this news..

[Balance]

A bit of action

Is $9,45 enough icing on the cake to tempt me?

Maybe it is seeing many say the share market is about to collapse in one big heap

Under a buck seems so long ago

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/RBD/325456/288806.pdf

Why 75%?

Would have thought that as a private company, Finaccess Capital would prefer to conduct all of its operations away from public scrutiny.

[winner69]

Why 75%?

Would have thought that as a private company, Finaccess Capital would prefer to conduct all of its operations away from public scrutiny.

Does seem a weird amount

[Ghost Monkey]

Why offer a 24% premium for a 75% stake? Will be following this with interest.

[steveb]

possibly they are not wanting to delist from the NZX and ASX

[Balance]

Why offer a 24% premium for a 75% stake? Will be following this with interest.

75% is a controlling stake.

[whatsup]

possibly they are not wanting to delist from the NZX and ASX

They may be want to retain the listing in order to fold their other interests into RBD for a very much larger company ?

[Balance]

They may be want to retain the listing in order to fold their other interests into RBD for a very much larger company ?

on NZX? Definitely no!

on ASX? Could well be!

[Ghost Monkey]

75% is a controlling stake.


Sure, I understand that. Still seems a hefty premium. Why not buy outright at that price? Whatsup
might be right about wanting to stay listed and bring in other businesses, that seems to be the approach with AmRest they have taken.

[Stylerz]

Is anybody familiar with the process of a potential partial takeover for existing shareholders.

i.e would everybody get the opportunity to sell 75% of their shares for $9.45?

[Rep]

Is anybody familiar with the process of a potential partial takeover for existing shareholders.

i.e would everybody get the opportunity to sell 75% of their shares for $9.45?

Yes - you should have a look at the recent partial takeover bid for Abano Healthcare if you want a case study - in that offer the acquirer was after 50.01% of the subject company. Incidentally Ted, the RBD chair will be familiar with this as he was until recently on the Board of Abano.

It will depend on the offer documents that are not yet available.

You could potentially offer some or all of your shares to the acquirer (because if there are shareholders that don't want to offer any shares to the acquirer they might want all of your shares to get to 75%).

In the case, that the offer was oversubscribed (e.g. they were offered more than 75% of the shares on the registry) then they would be scaled down pari passu across all the shares offered so that they would get 75% of the shares on the registry. If the offer is unsuccessful, then they are under no obligation to take any of the shares - although they could potentially still try to acquire shares on the open market in the meantime up until the offer is made (and subject to what rules apply after the offer is made could still try and buy them on open market).

The big difference with partial offers is the "control premium" in that if they did take up 75% of the shares and had control, then the value of the remaining shares would probably diminish as they would be potentially less liquid and the acquirer can do basically what they want (ask anyone who has shares in Richina) - the market tends to not like partial offers because of that. Full takeover offers are usually all or nothing so at least you aren't stuck with shares with a minority interest beholden to a majority shareholder - on the other hand, there are shares with majority shareholdings and small free floats (BGR and MHI come to mind as well as the gentailers like Mercury, Genesis and Meridian as well as Air NZ) but these were sell downs with a known party not via a partial takeover.

The question for RBD holders is whether the $1 premium is enough for the control and what might happen with an unknown shareholder (so what might happen with your remaining shares).

I'd heed the warning of the board and wait to see more details about the offer as well as the RBD board's response - clearly the acquirer sees value in RBD and this isn't RBD's first takeover that they have rebuffed. CVC had a go in 2005 but couldn't sort a deal with Yum about the franchises... and the SP was $1.10 and subsequently went all the way down to $0.55 when Tower quit their 10% stake (they once had 20%) in 2007 but it's a very different company from what it was in 2005.

Disc: Holding RBD

[steveb]

Very good reply rep,most informative
thanks

[James108]

I have had RBD in the stock picking competition for the last 3 years but never actually owned any. Bit silly.

[peat]

yeh, as SteveB says, good post Rep.
This happened with NZO recently as well.
Holders can be left hanging.

[RupertBear]

Well I sold half of my RBD shares yesterday to have some cash on hand for any potential bargains. :( B***er! Freeking typical! Oh well I still have the other half :cool:

[Stylerz]

es - you should have a look at the recent partial takeover bid for Abano Healthcare if you want a case study - in that offer the acquirer was after 50.01% of the subject company. Incidentally Ted, the RBD chair will be familiar with this as he was until recently on the Board of Abano.

It will depend on the offer documents that are not yet available.

You could potentially offer some or all of your shares to the acquirer (because if there are shareholders that don't want to offer any shares to the acquirer they might want all of your shares to get to 75%).

In the case, that the offer was oversubscribed (e.g. they were offered more than 75% of the shares on the registry) then they would be scaled down pari passu across all the shares offered so that they would get 75% of the shares on the registry. If the offer is unsuccessful, then they are under no obligation to take any of the shares - although they could potentially still try to acquire shares on the open market in the meantime up until the offer is made (and subject to what rules apply after the offer is made could still try and buy them on open market).

The big difference with partial offers is the "control premium" in that if they did take up 75% of the shares and had control, then the value of the remaining shares would probably diminish as they would be potentially less liquid and the acquirer can do basically what they want (ask anyone who has shares in Richina) - the market tends to not like partial offers because of that. Full takeover offers are usually all or nothing so at least you aren't stuck with shares with a minority interest beholden to a majority shareholder - on the other hand, there are shares with majority shareholdings and small free floats (BGR and MHI come to mind as well as the gentailers like Mercury, Genesis and Meridian as well as Air NZ) but these were sell downs with a known party not via a partial takeover.

The question for RBD holders is whether the $1 premium is enough for the control and what might happen with an unknown shareholder (so what might happen with your remaining shares).

I'd heed the warning of the board and wait to see more details about the offer as well as the RBD board's response - clearly the acquirer sees value in RBD and this isn't RBD's first takeover that they have rebuffed. CVC had a go in 2005 but couldn't sort a deal with Yum about the franchises... and the SP was $1.10 and subsequently went all the way down to $0.55 when Tower quit their 10% stake (they once had 20%) in 2007 but it's a very different company from what it was in 2005.

Disc: Holding RBD

Thanks for the information Rep, very helpful.

[winner69]

Directors obviously supporting the partial takeover by committing their shares

[hardt]

This offer is brilliant for holders, why would anyone not take part...

Selling fully down when this is complete

[peat]

This offer is brilliant for holders, why would anyone not take part...


The risk with partial t/overs as discussed earlier in this thread is that your remaining 25% of shares are still of unspecified future value.

[winner69]

The risk with partial t/overs as discussed earlier in this thread is that your remaining 25% of shares are still of unspecified future value.

If one doesn’t want to take a risk with the residual shares One can offer 100% of one’s shares and hope that total acceptances aren’t 75% ...or sell before hand at a discount to the $9.45

If the share price gets to $9.35 or more i’m selling, otherwise I’ll take my chances

Remember Russel said RBzd was going to be a $10 share one day

[hardt]

The risk with partial t/overs as discussed earlier in this thread is that your remaining 25% of shares are still of unspecified future value.

I will offer 100% and sell whatever remains at market price whatever that may be.

[peat]

I will offer 100% and sell whatever remains at market price whatever that may be.
whatever that may be

[artemis]

Not formal offer yet but according to the below link -

If the takeover is successful, Finaccess said it will keep the dividend policy unchanged for the near term, and promises not to de-list the company in the following 12 months unless it mounts a full takeover. If it does seek to mop-up the remaining shares, it promises not to offer a lower price, subject to wider movements on the benchmark NZX 50 index.

Not sure how that would work in practice, but once details are known could be worth holding on for the divvy. Risks- Finaccess sits on its 75%, which is control anyway; market takes a dive.

Re divvy - the company is likely to pay the next half year divvy anyway, possibly with a special if they have excess imp credits.


www.scoop.co.nz/stories/BU1811/S00805/restaurant-brands-to-sell-to-finaccess.htm

[Jonboyz]

PARTIAL TAKEOVER OFFER FOR RESTAURANT BRANDS AT NZ$9.45 CASH PER SHARE


Finaccess Capital, S.A. de C.V. (Finaccess Capital) is pleased to present to you this recommended partial takeover offer in relation to Restaurant Brands New Zealand Limited (Restaurant Brands). Our NZ$9.45 cash per share offer is in respect of 75% of the fully paid ordinary shares in Restaurant Brands (the Offer). The Offer is being made by our subsidiary, Global Valar, S.L. (the Offeror).


The Offer Document and target company statement (including the Independent Advisers Report) are available for download at www.rbdtakeover.co.nz (http://www.rbdtakeover.co.nz).
We believe the Offer is a compelling opportunity for shareholders to realise significant value for their investment in Restaurant Brands, with the offer price of NZ$9.45 cash per share representing a 24.3% premium to Restaurant Brands’ last close price prior to announcement of our proposal and a 26.1% premium to the 12 month VWAP at that time.


Each of Restaurant Brands’ independent directors and Stephen Copulos (who is a non-executive director) recommend that you accept our Offer in the absence of an unmatched superior proposal and subject to the Independent Adviser’s Report continuing to conclude that our Offer consideration of NZ$9.45 cash per share is within or above the Independent Adviser’s valuation range of NZ$8.15 to NZ$8.92 per share. Further details of the recommendation are set out in the target company statement.
We have entered into a separate agreement with Mr Copulos, Restaurant Brands’ largest shareholder with a current shareholding of approximately 8.5%. As part of this agreement, Mr Copulos has agreed to accept our Offer for all of the Restaurant Brands shares he holds or controls, subject to directors of Restaurant Brands not withdrawing or qualifying their recommendation of our Offer. Furthermore, all other directors intend to accept our Offer in respect of all of the Restaurant Brands shares that they hold or control, in the absence of an unmatched superior proposal.

[Zeitgeist]

Anyone else thinking of not participating in this and just keeping shares?

Sounds like the Mexican company are a medium/long term investor who will look to grow the business, probably at the expense of paying dividends. But they're almost certainly not going to be interested in ever selling part/all of their stake for less than $9.45.

So if you don't need the cash and can tolerate the logistics of being a minority holder with the majority shareholder making positive long term noises about maintaining listings (and with a track record of growing its Polish LISTED equivalent), why not keep the shares?

[Bjauck]

Anyone else thinking of not participating in this and just keeping shares?...
I have already reduced my holding in the past year. I am in two minds in relation to my remaining holding. Just some thoughts, so as always DYOR....

We are in a period of consolidating asset prices after a long bull run. RBD has already outperformed the wider market in the last few years. The offer price is also at a premium to the previous price. On the other hand the purchaser over the next few years may we’ll see further opportunities for the company and new products to introduce through the RBD network in NZ to justify its purchase price.

More generally: Yet another NZ listed company is being bought by overseas interests. We already have a very small share market for the size of the economy. Is it a healthy state of affairs for NZ to have such expensive residential land and a hollowed out share market? Will there come a time when most of the investable companies have been bought up by overseas interests and profit and capital outflows will not be offset by inflows due to immigration and inward investment?

[Jonboyz]

It's reasonably likely that you will have shares left over anyway even if you offer all of your RBD holdings. The price will drop after the offer goes unconditional - the document says probably to the level of just before the offer came out $7.68? - and then a lot of uncertainty...

- Finaccess might then be able to force remaining shares to be sold to them (full acquisition) but at what price?
- or possibly delist after 12 months.
- and/or possibly run the company very poorly and lose significant value
- or run the company incredibly well and make surviving shareholders rich!

I need to think about it a bit more, but I'll probably take up the offer to sell at least 50% of my holdings. The remaining 50% would then be a punt in the dark - hoping for greater things, but wiling to accept a loss.

[Zeitgeist]

My worst case scenario here is offering up 100% of my immaterial holding only for it to be decreased down to 25%.

I see a few favourable factors to continue holding:

- The residual shares in Finaccess's European investment have remained listed and Finaccess decreased its shareholding at least once
- Mounting a full takeover in future is not a simple process and if this was the ultimate end goal, why not just offer it now?
- RBD may perform well as a recessionary investment
- A multinational financial company is unlikely to sell for less than what they paid - so with a long term horizon I'd see $9.45 as a floor
- The European investment (per the offer doc) has performed very well since it was acquired

Cons:
- Dividend uncertainty
- Future capital raisings may require additional investment
- Illiquid market if wanting to sell
- Possible downward pressure on share price after transaction

[blackcap]

I think the best outcome for everyone is to accept the $9.45 on offer. Even if you do not want to sell your shares. Post the offer the shares are likely to be trading lower and you can buy back to the amount you wanted to retain. So even if I end up with 25% of my holding, that is not a problem, I can always buy more or sell the remainder knowing I received $9.45 for the 75% taken over.

[Snoopy]

PARTIAL TAKEOVER OFFER FOR RESTAURANT BRANDS AT NZ$9.45 CASH PER SHARE


Finaccess Capital, S.A. de C.V. (Finaccess Capital) is pleased to present to you this recommended partial takeover offer in relation to Restaurant Brands New Zealand Limited (Restaurant Brands). Our NZ$9.45 cash per share offer is in respect of 75% of the fully paid ordinary shares in Restaurant Brands (the Offer). The Offer is being made by our subsidiary, Global Valar, S.L. (the Offeror).


The Offer Document and target company statement (including the Independent Advisers Report) are available for download at www.rbdtakeover.co.nz (http://www.rbdtakeover.co.nz).
We believe the Offer is a compelling opportunity for shareholders to realise significant value for their investment in Restaurant Brands, with the offer price of NZ$9.45 cash per share representing a 24.3% premium to Restaurant Brands’ last close price prior to announcement of our proposal and a 26.1% premium to the 12 month VWAP at that time.


Each of Restaurant Brands’ independent directors and Stephen Copulos (who is a non-executive director) recommend that you accept our Offer in the absence of an unmatched superior proposal and subject to the Independent Adviser’s Report continuing to conclude that our Offer consideration of NZ$9.45 cash per share is within or above the Independent Adviser’s valuation range of NZ$8.15 to NZ$8.92 per share. Further details of the recommendation are set out in the target company statement.
We have entered into a separate agreement with Mr Copulos, Restaurant Brands’ largest shareholder with a current shareholding of approximately 8.5%. As part of this agreement, Mr Copulos has agreed to accept our Offer for all of the Restaurant Brands shares he holds or controls, subject to directors of Restaurant Brands not withdrawing or qualifying their recommendation of our Offer. Furthermore, all other directors intend to accept our Offer in respect of all of the Restaurant Brands shares that they hold or control, in the absence of an unmatched superior proposal.










Some may wonder why I am choosing to express a somewhat critical look at the Mexican RBD takeover. What those that haven't read the offer document in full may not realise is that the 'independent' directors have been gagged. Look at section 10.3(l).ii. There you will find that RBD will be subject to a $7m fine if

"any director of Restaurant Brands fails to recommend the offer, or makes other adverse comments in relation to the offer."

The only exception to this is if the independent report recommendation decides the offer is not fair. I have two real concerns about this.

1/ The independent directors seem to have given the tick of approval of the deal, before the independent report on the transaction has been received. To me that is negligent behavior. They should not have signed up to do this at the behest of the bidder.
2/ It is not the job of independent directors to simply 'box tick' the independent report. As the independent report says in Appendix E

"The most important part of valuation is to evaluate the attributes of the specific company being valued and distinguish it from its peers so as to form a judgement as to where on the spectrum it belongs."

Judgement involves a reasoned valuation of the pros and cons as highlighted in the report , and that the independent directors have not done. The independent directors have disgracefully delegated away their responsibility and authority in my view. I am not saying the deal isn't a good one. But I think the process used to arrive at that good/bad conclusion has been corrupted. Clearly those independent directors do not understand what the word 'independent' means. The directors did not independently evaluate the offer as the quoted text implies. They were told: "You will recommend the offer or the deal is off!"

SNOOPY

[Snoopy]

Judgement involves a reasoned valuation of the pros and cons as highlighted in the report , and that the independent directors have not done. The independent directors have disgracefully delegated away their responsibility and authority in my view.


The independent directors may have been silenced. But this hound is still free to howl. There are some key points in the takeover 'Recommended Offer' document that require more digging.

The offer price to acquire RBD shares has been highlighting at the $9.45 figure. But this offer to acquire shares is only for three out of every four shares on issue. One quarter of the shares on issue are not subject to the offer. The day before the shares offer was tabled, the share price was $7.60. So if that is an assessment of 'fair value' in the absence of the offer, then the real offer price is:

($7.60+3x $9.45)/4 = $8.99

The other thing shareholders need to remember is that the interim dividend that we shareholders should normally have received by now has been suspended. Last year that was 10cps. This year, given the higher declared profits, it may have been more. But we will stick with that 10c for the purpose of this exercise. If we shareholders today have to surrender this 10c payment, that means the real 'like with like' comparison value of the offer is:

$8.99 -$0.10 = $8.89

Grant Samuel, after evaluating the implied earnings multiples for the company, considers fair value to be between $8.15 and $8.92

So contrary to the conclusion of the report, the offer price is within the Grant Samuel fair value range after all.

This fair value range includes a 'premium for control We learn from section 6.1.1 of the 'Grant Samuel' report that:

"Shares in a listed company normally trade at a discount of 15%-25% to the underlying value of the company as a whole, but the extent of the discount (if any) depends on the specific circumstances of each company."

We also learn from section 7.5 that:

"It is not uncommon for takeover transactions to include a sharing of the "synergy" benefits from an acquisition between the buyer and the seller. As Global Valar is a financial buyer, there are no obvious operating synergies that should eventuate if the offer is implemented."

I take this to mean that the normal trading price in the absence of the offer may be only 15% below the offer price (i.e. the premium offered by Global Valar would likely be towards the low end of the premium scale).

If we divide my calculated value of the offer price by 1.15 (the multiple needed to translate a market price to a 15% premium), then we get a normal market price of:

$8.89/1.15 = $7.73

That is close to the $7.60 price point where RBD was trading the day before the offer. So it looks like the implied 15% premium that I suggested is fairly accurate.

The question that existing shareholders need to consider then is, is that 15% premium a sufficient price to pay?

SNOOPY

[Snoopy]

The question that existing shareholders need to consider then is, is that 15% premium a sufficient price to pay?


Another part of the agreement that shareholders need to think about is, if a full takeover is made within twelve months, then Global Valar has agreed that it shall not be less than the current $9.45 offer price. But this isn't the full story. That $9.45 offer price is to be scaled in accordance with the movement of the NZX50 at the time any wrap up offer is made. So if the NZX50 declines by 10% over that time, then 'Global Valar' are only required to offer:

$9.45 x 0.9 = $8.51 for the shares that are left. (See 'Recommended Offer' booklet Section 10.3(O)

Before any of this comes to pass there are a couple of 'outs' on the existing deal. If we look at the 'Recommended Offer' booklet, Section 9.2 on the terms and conditions, and the section titled 'Material Adverse Change', we see that if EBITDA falls by $10m from that budgeted for, then the deal can be called off. The budgeted normalized forecast EBITDA for FY2019, as found on p17 of the Target Company Statement is $98.9m. A $10m reduction on that is $88.9m. That sounds like a lot. But the historical EBITDA for FY2018 from the same table was $94.4m. So in fact the EBITDA only has to fall by 6% year on year for the takeover deal to be in jeopardy. Note that the above EBITDA figures exclude one off transactions, not related to normal operating performance.

The second 'out' is if the net tangible asset backing falls by more than $30m from the budgeted level. $30m represents $30m/123m = 24cps. This is quite a fall and would seem an unlikely scenario.

SNOOPY

[Blendy]

Thank you Snoopy for your extremely interesting and useful analysis on this situation! I appreciate the time you've put in to peel back the layers to see what lies beneath the shiny wrapping.

[weasel]

I think the best outcome for everyone is to accept the $9.45 on offer. Even if you do not want to sell your shares. Post the offer the shares are likely to be trading lower and you can buy back to the amount you wanted to retain. So even if I end up with 25% of my holding, that is not a problem, I can always buy more or sell the remainder knowing I received $9.45 for the 75% taken over.

I don't quite understand the waiver (takeover at 50.01%). is it:
- only if it doesn't make 75%? or
- completely at the discretion of the offeror?

[Snoopy]

I don't quite understand the waiver (takeover at 50.01%). is it:
- only if it doesn't make 75%? or
- completely at the discretion of the offeror?

Are you referring to information listed in the scheme of arrangement takeover offer? Or something else?

I don't have the offer document with me and don't know exactly what you are referring to. IIRC the Mexicans want 75% of all shares RBD. But if they don't get offered enough shares to reach that total, then they may at their discretion accept a lesser amount and still go through with the offer as long as they gain some kind of majority shareholding. If this were to happen it is likely that those shareholders who offered their shares to the Mexicans would get $9.45 for all of their shares and they would be left with none. If the Mexicans don't get offered 50.01% of the shares then the offer is dead and no-one gets $9.45 for any shares. That is the way I read it.

The terms of the offer are always at the discretion of whoever makes the offer. The only exception to this is that having made a formal offer, the Mexicans cannot reduce the consideration of that offer after shareholders accept the original terms of the offer. IOW they can't now say we will only offer you $9.00 per share for up to 75% of the company, not the $9.45 offered in the booklet. And they also can't say we will continue to offer shareholders $9.45 but only for 50.01% of their shares, not a minimum of 75%.

SNOOPY

[weasel]

Are you referring to information listed in the scheme of arrangement takeover offer? Or something else?

I don't have the offer document with me and don't know exactly what you are referring to. IIRC the Mexicans want 75% of all shares RBD. But if they don't get offered enough shares to reach that total, then they may at their discretion accept a lesser amount and still go through with the offer as long as they gain some kind of majority shareholding. If this were to happen it is likely that those shareholders who offered their shares to the Mexicans would get $9.45 for all of their shares and they would be left with none.

SNOOPY

Yes, this is the bit I am not so sure about, reading the document. If they get less than 75% I'm not convinced that "shareholders who offered their shares to the Mexicans would get $9.45 for all of their shares" - the oferror can perhaps only purchase a total of 50.01 at their discretion. Because it states in the document that if 75% is achieved then those who offered 75% of their own shares will definitely have them all sold. But it is not so clear if the 75% is not met.



If the Mexicans don't get offered 50.01% of the shares then the offer is dead and no-one gets $9.45 for any shares. That is the way I read it.
SNOOPY

Correct


The terms of the offer are always at the discretion of whoever makes the offer. The only exception to this is that having made a formal offer, the Mexicans cannot reduce the consideration of that offer after shareholders accept the original terms of the offer. IOW they can't now say we will only offer you $9.00 per share for up to 75% of the company, not the $9.45 offered in the booklet. And they also can't say we will continue to offer shareholders $9.45 but only for 50.01% of their shares, not a minimum of 75%.

SNOOPY
Right - but in the case that they get 74.9% I fear that they can scale that back to 50.01.%. I am unclear about this part. PS: document is online at www.rbdtakeover.co.nz/


Thanks
Wease

[Rep]

Deep.breath.inhale.hold.exhale.

There is no advantage in accepting the offer by Global Valar now as the offer closes on March 12 2019 - still well over a month away. Those accepting the offer early - depending on the number of shares that they accepted the offer (including all the ones they currently own) effectively lock themselves into the offer for the accepted shares and there is very little to be gained from doing so under the offer as under the takeover offer scaling will be applied across all of the parcels that were offered if oversubscribed at the $9.45 mark. No one including Global Valar is going to really know what level that they will obtain until we get closer to March 12th - they are required to file SSH notices each time they receive acceptance of each additional 1% of the shares on issue via the offer AND they will be probably visiting as many of the large institutional holders to lobby as they can in the next 6 weeks.

In the week immediately preceding the March 12th you will probably see a flurry of postal acceptances changing the acceptance rate and the SSH notices being posted daily - again if you are filing your acceptance online then a holder will have the luxury of being able to see the level of acceptances right up until the day prior to close and then using their holder number and acceptance number to file their acceptance right up to close (depending on the vagaries of the internet and presumably LINK who seem to be processing the offer) - at that time you will probably get a fairly good read whether they will cross the 50% or 75% thresholds at $9.45. if they don't get want they want, they could always extend the offer and sweeten the pot (i.e. offer more than $9.45) but the new terms would then apply to all of the acceptances so even if you had accepted at $9.45 then if the offer rises to say $9.55 then everyone get the new price.

Do you own research and by all means worry about things you have no control over but focus action on the things you can control and if you have the luxury to wait for additional information that is costless (there's no advantage in accepting earlier than March 12th) then wait before making a decision. Me - I'm not worrying about what I will do until March 12th when I will have a better read on what the level of acceptance might be although I doubt Global Valar will be updating during the day unless they are getting close to 50% or 75% to push the deal through on fence sitters like me.

Remember the $9.45 offer is for control which is why it is at a premium over the current SP of $8.60 - if you are really worried about being a minority holder then you can always sell your shares on the open market. It won't be $9.45 but $8.60 at the moment for the lot is a premium on the SP of about $7.50 in December and in my case shiploads more than my weighted average buy price.

[Snoopy]

Yes, this is the bit I am not so sure about, reading the document. If they get less than 75% I'm not convinced that "shareholders who offered their shares to the Mexicans would get $9.45 for all of their shares" - the oferror can perhaps only purchase a total of 50.01 at their discretion. Because it states in the document that if 75% is achieved then those who offered 75% of their own shares will definitely have them all sold. But it is not so clear if the 75% is not met.


Weasel, let me preface my post by saying that I am not a corporate lawyer and not familiar with all the legal ins and outs of a "scheme of arrangement", such as being offered here. However, I do wish to remind everyone that the offer price is not $9.45, because that offer is only for a guaranteed 75% of the shares you own.

The day before the Mexican offer was tabled, the share price was $7.60. So if that is an assessment of 'fair value' in the absence of the offer, then the real offer price is:

($7.60+3x $9.45)/4 = $8.99

If, as you suggest, there is a 'get out' clause that enables the Mexicans to pull back and only get 50% of the shares then the real offer price is:

(2x$7.60+2x $9.45)/4 = $8.53

Thus those who accepted the original offer at an equivalent of $8.99 would suddenly lose 46c per share of the payout they were expecting. Furthermore to pull off this act of trickery, it would only require a single shareholder to not accept on behalf of the shares they own for the offerer to get 74.99% of the shares on issue not 75%, and use this shortfall to reprice the deal. Since it is almost certain that one shareholder at least will not accept the deal, that is tantamount to the original offer being a dishonest representation.

The Mexicans want 75% to gain control of decisions like potentially jettisoning a substantial part of the business in the future, a deal that could otherwise be blocked by minority shareholders. So there is a real reason to believe they really want 75% of shares, not 50.01%. Perhaps it will be clearer to you if you reread the offer and see that the Mexicans are after 75% of RBD shares in total, not 75% of your RBD shares.

SNOOPY

[Snoopy]

Here follows my 'Snoopshot' on evaluating Restaurant Brands.

------

Restaurant Brands is the principal New Zealand licence holder for the following US “quick service restaurant” brands. The first two business concepts are licensed from master franchise holder ‘YUM brands’, a United States based company.

1/ KFC, the fast food chicken chain: 91 stores (there are additionally 6 independently franchised KFC outlets)
2/ Pizza Hut, the delco takeaway pizza chain : 46 stores (plus 42 independently franchised outlets).
3/ Starbucks, a coffee cafe chain, (licensed from master franchise holder the Starbucks Company based in Seattle USA). 26 stores.
4/ Carl’s Junior, a “burger chain” master franchised by CKE Restaurants Inc (USA): 18 stores. Carl’s Junior is very much in a development phase in New Zealand.

Operating licence agreements are generally for a ten-year term A ten-year option on extending the arrangements further is common.

Competition? In the fast food chicken market, KFC have 97 outlets. Second place is so far behind, no-one knows who they are!

In the takeaway Pizza market, Dominos Pizza lead with more than 90 stores. Pizza Hut is a close number 2 with 88 stores. That is still substantially more than the 66 outlets of Hell Pizza. These are the three chains with a national footprint.

The coffee shop chain market is lead by has many national chain players. Number 1, helped by their association with Mitre 10 Mega, is Columbus Coffee (67) with Robert Harris (40 outlets), and Esquires (29) and ‘The Coffee Club’ (28) all ahead of Starbucks (26) in Outlet terms. BBs café (23) and the fast growing Coffee Culture (20 outlets, including 15 in their Christchurch base) are other names to watch. Starbucks is officially now a ‘niche player’, clearly spelt out on p25 of AR2015.

The burger market is lead by McDonalds (187 outlets) , Burger King (80 outlets), Burger Fuel (42 outlets) and Wendy’s Burgers (22 outlets).. Carl’s Juniors 18+ outlets clearly have a difficult growth path ahead.

Restaurant Brands success so far is entirely driven by the KFC chain which makes up 82% of concept EBITDA, on ‘only’ 74% of revenue. Pizza Hut has been barely profitable over years of resizing and changing the ownership structure. Starbucks have closed over 40% of NZ outlets since FY2007. Carl’s Junior are an unproven growth prospect.

Conclusion: Yes for KFC and Pizza Hut. No for Starbucks. The jury is out for Carl’s Junior.


During 2016 'Restaurant Brands' has reinvented itself. What was a 'domestic franchisee' has become a 'multi-brand international restaurant business'. The vision is now:

"To be a leading operator of enduring and innovative Quick Service Restaurant (QSR) Brands in the jurisdictions in which the company operates."

Since this 'change of focus', there has been a push into the Australian and in particular the New South Wales' market. Restaurant Brands now owns more KFC outlets in Sydney/ New South Wales than any other KFC operator (61 stores). Similarly the push into Hawaii, with the acquisition of 'Pacific Island Restaurants', sees them controlling the largest QSR restaurant chain in that state (with 45 Pizza Hut Stores combined with 37 Taco Bell outlets). As part of this transition, the Starbucks franchise of coffee stores within New Zealand has been sold. The KFC chain (No. 1 in the fast food chicken market) and Pizza Hut (no.2 in the Pizza market) remain as part of the stable. Restaurant Brands is now the 'master franchisee' for Pizza Hut in New Zealand, with the provincial and lower volume stores being sold off to local operators. The roll out of the Carls Junior Burger chain seems to have stalled with total chain numbers down to 18. They are not a top three market player, being behind McDonalds (167 outlets), Burger King (83 outlets) and the locally owned Burger Fuel chain (52 outlets), and Wendy's Burgers (21 outlets).

Restaurants Brands must carefully follow the prescription of their master franchise owners for each restaurant concept. However there is some freedom and Restaurant Brands feel they can add particular value in both:

1/ Marketing AND
2/ Facility and supply chain management

Conclusion: Pass Test for New Zealand, Hawaii and New South Wales (with the exception of Carls Junior in the burger market in NZ).

[Snoopy]

I have used the net profit after tax, excluding non-trading items for the purpose of this comparison. Non trading items include those associated with store closures and sales transformation costs and insurance payments. These are omitted because they obscure how the business is performing on the ground.

Net Profit/No.of Shares

2011: $25.1m /97.763m= 25.7cps
2012: $18.4m /97.809m= 18.8cps
2013: $17.7m /97.856m= 18.1cps
2014: $18.9m /97.871m = 19.3cps
2015: $22.5m /97.871m = 23.0cps

Conclusion: No


I have used the net profit after tax, excluding non-trading items for the purpose of this comparison. Non trading items include those associated with store closures and sales transformation costs and insurance payments. These are omitted because they obscure how the business is performing on the ground.

Net Profit/No.of Shares

2014: $18.863m /97.871m = 19.3cps
2015: $22.523m /97.871m = 23.0cps
2016: $24.207m /102.871m = 23.5cps
2017: $30.567m /122.843m = 24.9cps
2018: $40.361m /123.629m = 32.7cps


Conclusion: Pass Test

[Snoopy]

This is the net profit, excluding non-trading items, divided by the end of year shareholders equity.

2011: $25.1m / $58.9m= 42.6%
2012: $18.4m / $59.8m= 30.8%
2013: $17.7m / $60.3m= 29.4%
2014: $18.9m / $64.7m = 29.2%
2015: $22.5m / $71.2m = 31.6%

Conclusion: Yes


Net Profit excl. non trading / Shareholder Equity EOFY

2014: $18.863m / $64.656m = 29.2%
2015: $22.523m / $71.210m = 31.6%
2016: $24.207m / $75.617m = 32.3%
2017: $30.567m / $192.059m = 15.9%
2018: $40.361m / $201.608m = 20.0%

Conclusion: Pass Test

PS For comparative trend purposes the annualized latest half year ROE is as follows:

HY2019: ($21.853m x2) / $217.075m = 20.1%

[Snoopy]

This is the net profit, excluding non-trading items, divided by the total sales for the year.

2011: $25.1m / $324.4m= 7.74%
2012: $18.4m / $308.2m= 5.97%
2013: $17.7m / $311.9m= 5.68%
2014: $18.9m / $329.3m = 5.74%
2015: $22.5m / $359.5m = 6.26%

The margin has reduced over the five-year period examined. Nevertheless, the ability to recover margin after a market squeeze has been apparent over the last three years. Centralizing the company’s recruitment system and updating point of sale technology over FY2013 were partially behind the subsequent years’ recovery..

Conclusion: Yes

This is the net profit, excluding non-trading items, divided by the total sales for the year. Note that in a change from the 2015 perspective I am now including 'other revenue' as part of the representative ongoing revenue of the company. This is because the largest part of other revenue is money received from YUM to act as master franchise holder for Pizza Hut in New Zealand. And this is a revenue stream that will be ongoing

2014: $18.863m / $330.399m = 5.7%
2015: $22.523m / $372.803m = 6.0%
2016: $24.207m / $404.095m = 6.0%
2017: $30.567m / $517.549m = 5.9%
2018: $40.361m / $766.289m = 5.3%

Conclusion: Fail Test

SNOOPY

[Snoopy]

Pizza Hut has been turned around with the best “Concept EBITDA” since 2006. Starbucks EBITDA was the best ever in FY2015. Both of these divisions have dragged down the overall company result in previous years. At KFC the store transformation program, begun in FY2005, is 90% completed. However, the fact that all three established divisions are performing in one year does not mean we can assume they will do so in future years. The past earnings trend just isn’t good enough. This means we cannot use the Mary Buffett ‘growth model’ to estimate the future value of this share. I propose we use the average dividend paid, expressed as a dividend yield, to value this share instead.

Discl: hold RBD, but not because Warren Buffett would approve!


A significant progression has occurred since Restaurant Brands have shifted outlook from becoming a 'domestic franchiser' to an 'international restaurant developer'. The point of failure in the 'Buffett Tests' is now the seemingly ever decreasing net profit margin. To give this some context, I have stacked up the profit margin trend against the company that develops the KFC concept in China, YunChina (YUMC). YUMC is twenty times the size of RBD and operates in a different market. Nevertheless, the underlying mode of operation, developing new outlets for the master franchise holder in the US - YUM brands - is the same. Furthermore I have calculated the Net Profit Margin for the most recent half year reporting period for RBD:

$21.853m / $445.848m = 4.9%

and added that to the trend comparison. Note that I am comparing the RBD year that ends in March with the YUMC year that ends in December. The best overlap is to consider the RBD FY2018 year ending 31st March 2018 with the YUMC year ending 31st December 2017, So this is what I have done for all years




FY2014FY2015FY2016FY2017FY2018HY2019


Restaurant Brands Net Profit Margin
5.7%6.0%6.0%5.9%5.3%4.9%


YumChina Net Profit Margin
4.1%3.7%5.4%7.0%8.3%



What can explain the two apparently diverging trends? The low profitability of YUMC in FY2013 and FY2014 can be explained by a supplier food handling scandal. In FY2014 that saw a same store sales decline of up to 40% at some KFC outlets. FY2015 was a period spent rebuilding from this. So it is the FY2016, FY2017 and FY2018 net profit margins are reflective of what shareholders might expect without these adverse conditions at YumChina.

By contrast at RBD, FY2017 and FY2018 are the periods where the great overseas expansion strategy was coming into play. In AR2018 p26 and p27, CEO Russel Creedy gives a candid interview. He says that to gain the 'growth' required for the company's strategic vision, to become a billion dollar company in revenue and market capitalization, it was necessary to buy that growth by investing overseas. Yet later in that same interview he admits that:

"Our growth strategy also includes new store builds which incidentally generate the highest return in investment."

Putting the two comments together, it is clear that growth overseas where you are generally buying stores rather that building them is less profitable. Sure Taco Bell in Hawaii has a high EBITDA as a percentage of sales at concept level. But this does not include the extra interest costs incurred in funding the purchase, nor the extra more bloated corporate structure behind the scenes needed to manage it. The RBD growth strategy contrasts very greatly with YumChina who develop all their own stores from scratch.

The ROE decline at RBD mirrors a similar pattern, although there are signs it has stabilized near 20%. This is still a good figure in absolute terms, albeit well down on 30% that was regularly attainable when RBD was an NZ focussed business. Yet so great has been the drop against a background of the NZ side of the business doing well, I think questions need to be asked as to what the ROE is on the overseas side of the business, and just how far above the cost of capital are these overseas business returns?

Taken overall it looks like RBD are on a path of increasing profits, even in eps terms, but decreasing profitability.. Are there shades of Buffett's much derided management phenomenon of the 'institutional imperative' at work here? The naval analogy of the 'institutional imperative' is that our 'captains of industry' would prefer to skipper a battleship, even one with dis-functional weapons than a smaller well armed frigate.

It is possible that RBD will be able to turn their overseas investments around, with more green field KFC projects in New South Wales and a rebuild program in Hawaii that will revamp that states restaurants so that earnings double in that state. However talk that RBD will instead look to acquire more existing restaurants on the West Coast of the United States as their prime growth plan would argue against the positive overseas growth outcome. I think Warren Buffett would be waiting to see if the overseas strategy was not going to degrade the profitability of RBD too much before investing his own money in the RBD story going forwards.

SNOOPY

discl: hold RBD myself, but bought many years ago

[Snoopy]

Dividends paid in the calendar years below were as follows:

2011:: 7.0c, 10.0c
2012:: 6.5c, 9.5c
2013:: 6.5c, 9.5c
2014:: 6.5c, 10.0c
2015:: 7.5c, 10.0c

The average annual dividend 16.6 cps is fully imputed. 16.6c is equivalent to a gross yield of :
16.6c / (1-0.28) = 23.1c.

Current term deposit rates are around 4%. I would want a return two percentage points better than this to allow for the greater income volatility risk of share such as this. So my June 2015 valuation for RBD is:

23.1/ 0.06 = $3.84

Should term deposit interest rates fall to 3.5% my valuation would increase to:

23.1/0.055 = $4.20

With RBD trading at up to $4.40, the company is now overvalued. However, any share can be expected to be overvalued for extended periods. Furthermore, the overvaluation is not great. If the Carl Juniors growth story takes off (i.e. my modelling is too conservative), then RBD may not be overvalued. In the absence of a better retail/food investment, I will continue to hold.



Dividends paid in the financial years below were as follows:

FY2014:: 9.5c, 6.5c
FY2015:: 10.0c, 7.5c
FY2016:: 11.5c, 8.5c
FY2017:: 12.5c, 9.5c
FY2018:: 13.5c, 10.5c
HY2019: 18.0c


The average annual dividend 20.6 cps fully imputed. 20.6c is equivalent to a gross yield of :
20.6c / (1-0.28) = 30.0c.

Current term deposit rates are around 3.5%. I would want a return two percentage points better than this to allow for the greater income volatility risk of share such as this. So my January 2019 valuation for RBD is:

30.0 / 0.055 = $5.45

This valuation is strictly from an 'income' perspective. With the share trading at $7.60 just prior to the 'Global Valar SI' takeover offer, this shows that there was a considerable growth premium built into the share price before the Mexicans came along. At an offer price of $8.90, there is now a huge growth premium built in. A premium I would suggest that can only be satisfied with a sustained push into Pacific rim markets.

SNOOPY

[Snoopy]

The ROE decline at RBD mirrors a similar pattern, although there are signs it has stabilized near 20%. This is still a good figure in absolute terms, albeit well down on 30% that was regularly attainable when RBD was an NZ focussed business. Yet so great has been the drop against a background of the NZ side of the business doing well, I think questions need to be asked as to what the ROE is on the overseas side of the business, and just how far above the cost of capital are these overseas business returns?


Having posed the above question, I think rather than speculating on what the answer might be, I should 'do the maths' and find out.

From the Buffettology Workbook, p149

"We take the per share amount of earnings retained by a business for a certain period of time then compare it to any increase in per share earnings that occurred during the same period"

In this instance the 'per share earnings retained' has been supplemented by a whole lot of new capital raised with the October 2016 cash issue. So in my judgement it is best to use the change in shareholders equity from the reporting date before the cash issue (EOFY2016) to the end of FY2018. FY2018 was the first full year of operation that included the Hawaiian and most (42) of the Australian KFC acquisition (18 more KFC stores were acquired over FY2018).



EOFY2016Change]EOFY2018


Normalised Earnings {A}$24.207m]$40.361m


No. of Shares {B}102.871m]123.629m


eps {A}/{B}23.53c+9.12c {D}]32.65c


Owner Equity {C}$75.617m]$210,608m


Owner Equity per share {C}/{B} 74c+96c {E}]$1.70


Return on Incremental Equity / Share {D}/{E}+9.5%]



The above should not be too much of a surprise. If the overseas operations are now roughly the size of the NZ business, the ROE before overseas acquisitions was 30% and the ROE after overseas acquisitions was 20%, then it would take a figure that low to bring the average ROE down to 20%. I would also argue that not all of that new capital has been in use all of the time (the capital raised one quarter of the way through the study period and gradually deployed over it).

I don't know what the generally accepted value of the cost of capital of RBD is these days. But I would guess that 9.5% 'plus a bit' is still above it. I suppose what this means is that real underlying growth for RBD will be much slower going forwards compared to the recent past.

SNOOPY

[weasel]

Couple of questions - Am I allowed to sell my shares on market if I have already agreed to the offer? This would affect the statistics that RBD periodically release saying what percentage of shares have been offered for the takeover. Second, if I purchase more shares on market can I offer them to the takeover immediately? thanks...

[Hectorplains]

Couple of questions - Am I allowed to sell my shares on market if I have already agreed to the offer? This would affect the statistics that RBD periodically release saying what percentage of shares have been offered for the takeover. Second, if I purchase more shares on market can I offer them to the takeover immediately? thanks...

1. No
2. Yes - see p16: http://www.restaurantbrands.co.nz/global-valar-offer-document

...you'd probably want to read the whole document.

[Rep]

Probably off the menu for RBD (as they own the Carl's Jr franchise via CKE)

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12209170

Blackstone paid way over the odds in 2011 at over $108m (plus I think they took on a lot of debt), there was a large overhang of store upgrades that had to be done for franchise renewals and now 8 years later they are looking at selling for an estimated $20m...

Admittedly RBD didn't do particularly at the outset and saw the share price go from IPO at about $2 all the way down to $0.55 but now that's $8.75 (albeit supported by a partial offer at $9.45) - Blackstone have potentially hosed $80m here - OUCH!

[Snoopy]

Probably off the menu for RBD (as they own the Carl's Jr franchise via CKE)

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12209170

Blackstone paid way over the odds in 2011 at over $108m (plus I think they took on a lot of debt), there was a large overhang of store upgrades that had to be done for franchise renewals and now 8 years later they are looking at selling for an estimated $20m...

- Blackstone have potentially hosed $80m here - OUCH!


Rep, the article you referenced said that the 'Burger King' Franchise in New Zealand made $20m profit last year, not that Blackstone expected to sell the chain for $20m, I doubt if Blackstone would be selling this chain on a PE of just 1. Unless there was some horrendous cost in the current franchise agreement that says all restaurants have to be rebuilt or something. Happy to be proved wrong if you have other information.

There is a precedent for RBD acquiring a rival chain and turning it into its own. Way back in 2000 RBD acquired the 54 store Eagle Boys chain and converted them all into Pizza Huts. Could 'Burger King' be acquired with all stores to be converted into 'Carls Junior' outlets? I guess it depends on the master franchise arrangement Blackstone has with the American master franchise parent.

SNOOPY

[Rep]

Rep, the article you referenced said that the 'Burger King' Franchise in New Zealand made $20m profit last year, not that Blackstone expected to sell the chain for $20m, I doubt if Blackstone would be selling this chain on a PE of just 1. Unless there was some horrendous cost in the current franchise agreement that says all restaurants have to be rebuilt or something. Happy to be proved wrong if you have other information.

There is a precedent for RBD acquiring a rival chain and turning it into its own. Way back in 2000 RBD acquired the 54 store Eagle Boys chain and converted them all into Pizza Huts. Could 'Burger King' be acquired with all stores to be converted into 'Carls Junior' outlets? I guess it depends on the master franchise arrangement Blackstone has with the American master franchise parent.

SNOOPY

Sorry all - misread the article on the phone on way to work.

[Stylerz]

Anybody care to make a prediction if the take over is going to be successful.

I was initially very confident. But getting very close to deadline and only 32% shares offered so far. Not so sure now.

[Snoopy]

Anybody care to make a prediction if the take over is going to be successful.

I was initially very confident. But getting very close to deadline and only 32% shares offered so far. Not so sure now.


I wonder if the gagging of the independent directors is working against the takeover? If they were free to speak, there might be more debate in the media about the pros and cons of the offer. The directors are probably so terrified that if they open their mouths at all, then something they said could be misinterpreted as speaking against the deal. So all directors have remained silent. But the problem now is the deal is out of the news completely. If the deal had been free to be discussed openly, then it may have got more media and hence shareholder traction. A couple of weeks back, I got a card in the mail 'reminding me to send in my acceptance'. There was no attempt to resell the deal on that card, a fact that surprised me.

I have been one of the hold outs, but posted my acceptance form for all my shares away today. I too thought acceptances would flow in thicker and faster. But now you can do it on the net, there could be an ambush of acceptances at the last minute.

The fact that I chose to post in my acceptance is partly because I remain luke warm on the deal. I am half hoping the post service slow motion will kick in and my acceptance form won't make it in time!

As you can see in my post 2439, the real value of the offer is $8.89, not $9.45. So one way of judging the likely success of the offer is to look at the market price and see if it goes over $8.89. The share price spiked pretty close to that on 11th February (got to $8.84). But it has since fallen back. This to me is an indicator that the takeover will get there. But I am not sure that 'there' will end up at 75% of all shares. Global Valar might get to 65% and say that is enough, something they are entitled to do under the scheme of arrangement that they produced.

It would be fascinating to get an operational trading update for RBD, for the financial year just closed. But no doubt directors won't give we shareholders that. Perversely, if RBD is on or ahead of budget, that could be seen as talking down the value of the offer! $8.89 I think is a fair price rather than a great price. But it was the prospect of getting more of my shares paid out at $9.45 than the 75% of shares I expected to get, that finally got me to send in my acceptance form. Nevertheless, I hope to keep some 'skin in the game' after the Mexican takeover is over.

SNOOPY

[glennj]

I wonder if the gagging of the independent directors is working against the takeover? If they were free to speak, there might be more debate in the media about the pros and cons of the offer. The directors are probably so terrified that if they open their mouths at all, then something they said could be misinterpreted as speaking against the deal. So all directors have remained silent. But the problem now is the deal is out of the news completely. If the deal had been free to be discussed openly, then it may have got more media and hence shareholder traction. A couple of weeks back, I got a card in the mail 'reminding me to send in my acceptance'. There was no attempt to resell the deal on that card, a fact that surprised me.

I have been one of the hold outs, but posted my acceptance form for all my shares away today. I too thought acceptances would flow in thicker and faster. But now you can do it on the net, there could be an ambush of acceptances at the last minute.

The fact that I chose to post in my acceptance is partly because I remain luke warm on the deal. I am half hoping the post service slow motion will kick in and my acceptance form won't make it in time! As you can see in my post 2439, the real value of the offer is $8.89, not $9.45. So one way of judging the likely success of the offer is to look at the market price and see if it goes over $8.89. The share price spiked pretty close to that on 11th February (got to $8.84). But it has since fallen back. This to me is an indicator that the takeover will get there. But I am not sure that 'there' will end up at 75% of all shares. Global Valar might get to 65% and say that is enough, something they are entitled to do under the scheme of arrangement that they produced.

It would be fascinating to get an operational trading update for RBD, for the financial year just closed. But no doubt directors won't give we shareholders that. Perversely, if RBD is on or ahead of budget, that could be seen as talking down the value of the offer! $8.89 I think is a fair price rather than a great price. But it was the prospect of getting more of my shares paid out at $9.45 than the 75% of shares I expected to get, that finally got me to send in my acceptance form. Nevertheless, I hope to keep some 'skin in the game' after the Mexican takeover is over.

SNOOPY

I thought hard about doing the same as Snoopy but decided not to tender my 25k shares in to the offer and the same with another couple of other smaller but useful parcels I control.
After reading more from the Mexican's it may not be bad being a minor shareholder that is not gobbled up as part as the offer. I like this company a lot and feel that we shouldn't be giving away the opportunities too cheaply. If the deal doesn't succeed I'll be happy and if I'm left as a minority it will not be the end of the world as the company is to remain listed and I'm keen to have part of this company well in to the future.

[Snoopy]

I thought hard about doing the same as Snoopy but decided not to tender my 25k shares in to the offer and the same with another couple of other smaller but useful parcels I control.

After reading more from the Mexican's it may not be bad being a minor shareholder that is not gobbled up as part as the offer. I like this company a lot and feel that we shouldn't be giving away the opportunities too cheaply. If the deal doesn't succeed I'll be happy and if I'm left as a minority it will not be the end of the world as the company is to remain listed and I'm keen to have part of this company well in to the future.


Glennj I salute you! And if you ever see me waddling down the street I hereby give you permission to address me as "Sellout scum."

I guess I am not going to change your mind. But I do invite you to look at my post number 7 in the YumChina thread on the 'Overseas' forum. There I have compared the offer price for RBD by Global Valar, verses the private equity offer for YumChina made a year ago in EBIT and EBITDA multiple terms.

Good as RBD has been, it doesn't stack up that well compared to YumChina in terms of earnings metrics. Yet the offer price made by Global Valar is almost as good for the shares that get accepted:

1/ EBIT for RBD are 18.5 to 20, while (c.f. 20.5 for YUMC)
2/ EBITDA multiples for RBD are 12.2 to 13.2. (c.f. 13.5 for YUMC)"

The contrasting approach taken by the respective CEOs is interesting. Joey Wat of YumChina effectively told private equity to 'get lost' and refused to put their takeover offer to shareholders. One year on and YUMC has already rebounded to the private equity takeover price on operational performance since. Russel Creedy of Restaurant Brands OTOH rolled over and asked Global Valar to tickle his belly. When Creedy eventually retires, I expect he will nominate a spineless jellyfish as his replacement!

Anyway, I don't want to be too critical of Russel as generally I think he is an outstanding chief executive, even if I don't agree with every decision he makes. I do expect the RBD share price to drop after the offer is complete, although not by as much as some think. But I wouldn't be surprised if in twelve months time the price of those remaining shares is north of $9.45.

SNOOPY

[winner69]

Russel did say share price will be over 10 bucks ...didn’t say when

[Snoopy]

Russel did say share price will be over 10 bucks ...didn’t say when

Are you accepting Winner? Or holding out for that 'tenner"?

SNOOPY

[winner69]

Are you accepting Winner? Or holding out for that 'tenner"?

SNOOPY

I’m accepting

Hope I retain a few as love following Carl’s progress

[weasel]

Anybody care to make a prediction if the take over is going to be successful.

I was initially very confident. But getting very close to deadline and only 32% shares offered so far. Not so sure now.

41% at the close of play on Thursday. It's growing!

[weasel]

41% at the close of play on Thursday. It's growing!

49.5% at the end of Friday.

[blackcap]

49.5% at the end of Friday.

looks like they are going to get there doesn't it.

[Snoopy]

looks like they are going to get there doesn't it.

As announced to the stock exchange on Monday:

--------

The Partial Takeover was conditional on Finaccess Capital receiving acceptances for at least 75% of Restaurant Brands’ shares. Finaccess Capital has announced that it has waived the 75% acceptance condition and that, to date, it has received acceptances for 61.73% of Restaurant Brands’ shares.

As a result, the Partial Takeover is now unconditional as to acceptances,* and under the Takeovers Code the closing date for the Partial Takeover has been automatically extended to 26 March 2019.

--------

Looks like we have to wait for the end of the month to get our payout.

SNOOPY

[Rep]

As announced to the stock exchange on Monday:

--------

The Partial Takeover was conditional on Finaccess Capital receiving acceptances for at least 75% of Restaurant Brands’ shares. Finaccess Capital has announced that it has waived the 75% acceptance condition and that, to date, it has received acceptances for 61.73% of Restaurant Brands’ shares.

As a result, the Partial Takeover is now unconditional as to acceptances,* and under the Takeovers Code the closing date for the Partial Takeover has been automatically extended to 26 March 2019.

--------

Looks like we have to wait for the end of the month to get our payout.

SNOOPY

Snoopy - thoughts?

One proposition is that given that Finaccess will achieve control, those shareholders who held out and wish to continue to hold could adopt the position that should accept the offer at $9.45 to realise the control premium on their holdings and then reacquire the original number of shares they had afterwards at the listed price less the control premium from the remaining float.

Some shareholders may find if there is scaling on the extended offer that they end up with small holdings that don’t want (or potentially below the min holding) so may wish to exit these holdings so there may be a bargain or not

[Snoopy]

Snoopy - thoughts?

One proposition is that given that Finaccess will achieve control, those shareholders who held out and wish to continue to hold could adopt the position that should accept the offer at $9.45 to realise the control premium on their holdings and then reacquire the original number of shares they had afterwards at the listed price less the control premium from the remaining float.

Some shareholders may find if there is scaling on the extended offer that they end up with small holdings that don’t want (or potentially below the min holding) so may wish to exit these holdings so there may be a bargain or not.


The fact that some people may be left with small holdings that they wish to dispose of has always been the result of this partial takeover bid, once it has become clear that scaling is going to happen.

The market share price closed yesterday at $8.80. That is very close to the $8.89 in my post 2439, which I consider the real value of the bid. There is such a thing as 'minimum brokerage'. So I think there is now a case for those holders in danger of being stuck with a below minimum size holding to sell now on the market, effectively realising their premium from the 'Global Valar' on the market today.

On the eve of the offer closing, I would expect the share price to approach $8.89. Immediately after the offer closes, I would expect the price for the remaining shares to drop back to $7.60 (being the market price the day before Global Valar offer) all things being equal. But of course, all things are not equal, because we are about to learn the result for the FY2019 financial year in April. The sales figures already released look good. I wouldn't be surprised if the intrinsic value of the remaining shares is now greater than $7.60.

In the short term, the share price will be driven by supply and demand. After the offer the free float of RBD will reduce from approximately $1b to $250m. It is likely this will see RBD fall out of the NZX50 (although I could be wrong, it is on the cusp). That could trigger the index funds to sell their residual holdings. My hunch is that immediately after the takeover closes may not be the best time to top up one's holding because of this reason.

I am unclear what the position of the index funds is now. My broker suggested that they will offer up only 75% of their shares into this unconditional offer and retain the remaining 25% until the index issues become clear. I would be interested if anyone can clarify the index funds' positions in a partial takeover like this.

SNOOPY

[Bjauck]

I will seek to sell all my holding. It has already been a very good long-term investment for me. However it is a shame that yet another kiwi company slips out of Kiwi shareholders control.

[rayonline]

On the application I allowed up to all my shares to be bought. Even if I want more later I can reconsider that in the future ...

[Snoopy]

I will seek to sell all my holding. It has already been a very good long-term investment for me. However it is a shame that yet another kiwi company slips out of Kiwi shareholders control.


"As at 12 March 2019, the total number of acceptances of the Offer is now 91,080,599 Shares comprising 73.01% (rounded to two decimal places) of the Shares."

So by the expiry of the original takeover date, Global Valar were short of their original 75% target. That is quite staunch resistance and I take my hat off to the 'remain in NZ hands' brigade who have not accepted the offer up until now. However, Bjauck has indicated that he will be joining me in 'sellout scum' street. And no doubt there will be others.

The interesting point in all of this is that up until the partial takeover bid, there weren't many unhappy RBD shareholders. There was no underlying appetite to sell out and no recent management stumbles (maybe Carls?). So I am picking that quite a few of you that 'sell down' will be looking to buy back into the remaining free float of shares which are left. That means I am expecting the share price to rise from the theoretical $7.60 post offer until that residual index fund selling kicks in. But if the initial rise is high enough, there may not be any need for index fund selling?

SNOOPY

[blackcap]

"As at 12 March 2019, the total number of acceptances of the Offer is now 91,080,599 Shares comprising 73.01% (rounded to two decimal places) of the Shares."

So by the expiry of the original takeover date, Global Valar were short of their original 75% target. That is quite staunch resistance and I take my hat off to the 'remain in NZ hands' brigade who have not accepted the offer up until now. However, Bjauck has indicated that he will be joining me in 'sellout scum' street. And no doubt there will be others.

The interesting point in all of this is that up until the partial takeover bid, there weren't many unhappy RBD shareholders. There was no underlying appetite to sell out and no recent management stumbles (maybe Carls?). So I am picking that quite a few of you that 'sell down' will be looking to buy back into the remaining free float of shares which are left. That means I am expecting the share price to rise from the theoretical $7.60 post offer until that residual index fund selling kicks in. But if the initial rise is high enough, there may not be any need for index fund selling?

SNOOPY

I will be looking to buy back in again too. Not an unhappy shareholder at all. With my $9.45 I will be looking to buy back in at anything under $8.50 and increase my holding.

[Snoopy]

With my $9.45 I will be looking to buy back in at anything under $8.50 and increase my holding.


You won't be the only one blackcap.

Last years earnings were 32.7cps. So the $8.50 you are prepared to pay puts this on an historical PE of 26. There is quite a bit of future growth that you are banking to justify paying a share price like that!

Of course, that is not to say such growth is unattainable. But our Russel has already admitted that expansion by acquisition is not as profitable as expansion by organic growth. He has sort of hinted that down the line there will be a capital raising. Discounted shares will be available at that point I think. But when will that be? And how much will RBD raise? All unknown. The trigger might be RBD purchasing some KFC outlets on the western side of the United States.

Taco Bell has been put on hold in NZ for years. But all I see is a cashflow drain for many years if TB comes to NZ. Reading between the lines, it looks like parent YUM is pushing for this rather than RBD itself. I have said before that when the Taco Bell tolls, that might be an exit signal for RBD shareholders!

Nevertheless I think that YUM has great faith in our Russel, to the extent they regard him as a cult figure who must be kept at almost any cost. Hence the $1m after tax payment to retain him to align his interests with shareholders (sic) so far. Added to that is the early vesting of his share options that were due to be cashed in only when the RBD share price got to $10 (now apparently $9.45 or is that $8.90 is suddenly enough).

When I buy something I like to stack it up against a measuring stick. If I look to the far east and China, I see Yum China (NYSE:YUMC) trading at $41.14 on my projected normalised NPAT for the year just gone of $1.61. That equates to a PE of 25.5. YUMC is twenty times the size of RBD. But to my mind, the growth path ahead has less risk. All YUMC has to do to triple in size is 'just keep doing exactly as they are doing'. No capital injections in the future required. I see far more execution risk for the future at RBD. So for me, topping up on RBD at $8.50 would be too high a price to pay.

SNOOPY

PS Not recommending buying YUMC at these price levels either!

[weasel]

"
So by the expiry of the original takeover date, Global Valar were short of their original 75% target.
SNOOPY

And the day after the original offer closed it increases to 86%? Seems a bit fishy to me. Might see retracement today back towards your "true offer" price.

[Snoopy]

And the day after the original offer closed it increases to 86%? Seems a bit fishy to me. Might see retracement today back towards your "true offer" price.


Blame NZ Post?

For sure, if people think:

1/ They are going to sell significantly more of their own shares into the offer than they first thought, then they would be rational to pay more on market pre-offer than
2/ If they buy on market assuming only 75% of the shares they tender will be accepted.

But the more shares that are tendered, the more any implied market premium for being able to sell more shares to 'Global Valar' will reduce.

Reworking my 'before' and 'after' value equation, we can see how the 'remainder price' (RP) and 'market price' (MP) relate to each other. I use the $9.08 share price ('Market Price' MP), which is where RBD is trading as I write this:

($RP+3x $9.45)/4 = $MP

($RP+3x $9.45)/4 = ($9.08) => RP= $7.97

You can add 10c onto the remainder price. That is the 'foregone dividend' that those shareholders who have their shares accepted into the offer will never get back. Effectively the market is now telling us that the price for the remaining shares after the takeover is done and dusted, should be $8.07. Whether that is fair or not depends on how the results for the financial year just finished scrub up when they are presented in April (no doubt after the takeover is over).

SNOOPY

[Snoopy]

For sure, if people think:

1/ They are going to sell significantly more of their own shares into the offer than they first thought, then they would be rational to pay more on market pre-offer than
2/ If they buy on market assuming only 75% of the shares they tender will be accepted.

But the more shares that are tendered, the more any implied market premium for being able to sell more shares to 'Global Valar' will reduce.

Reworking my 'before' and 'after' value equation, we can see how the 'remainder price' (RP) and 'market price' (MP) relate to each other. I use the $9.08 share price ('Market Price' MP), which is where RBD is trading as I write this:

($RP+3x $9.45)/4 = $MP

($RP+3x $9.45)/4 = ($9.08) => RP= $7.97

You can add 10c onto the remainder price. That is the 'foregone dividend' that those shareholders who have their shares accepted into the offer will never get back. Effectively the market is now telling us that the price for the remaining shares after the takeover is done and dusted, should be $8.07. Whether that is fair or not depends on how the results for the financial year just finished scrub up when they are presented in April (no doubt after the takeover is over).


Wow, share price closing at $9.20 today. This is getting a bit crazy. Starting to think I should not have accepted the offer at all and just sold everything on market!

The more shares that are tendered, the more any implied market premium for being able to sell more shares to 'Global Valar' should reduce. As of today 87.1% of shares have been accepted, so this theory is looking a little fragile.

Reworking my 'before' and 'after' value equation, we can see how the 'remainder price' (RP) and 'market price' (MP) relate to each other. I use the $9.20 share price ('Market Price' MP), which is where RBD is trading as I write this:

($RP+3x $9.45)/4 = $MP

($RP+3x $9.45)/4 = ($9.20) => RP= $8.45

You can add 10c onto the remainder price. That is the 'foregone dividend' that those shareholders who have their shares accepted into the offer will never get back. Effectively the market is now telling us that the price for the remaining shares after the takeover is done and dusted, should be $8.55. Whether that is fair or not depends on how the results for the financial year just finished scrub up when they are presented in April (no doubt after the takeover is over). It seems some of those on market buyers must be expecting a very favourable result

SNOOPY

[glennj]

FWIW today my full service broker revealed that there is strong interest from those that tendered their stock into the Global Valar offer to buy back in to RBD.

[Snoopy]

FWIW today my full service broker revealed that there is strong interest from those that tendered their stock into the Global Valar offer to buy back in to RBD.


I wonder what price those happy to buy back in will be happy to pay though? Blackcap has stated up to $8.50. A full service broker will add another 12c or so to that for brokerage. But the indicative price may have already gone above that level. I guess those that also hold ATM shares in their portfolio will buy back in at any price?

SNOOPY

[Snoopy]

Dividends paid in the financial years below were as follows:

FY2014:: 9.5c, 6.5c
FY2015:: 10.0c, 7,5c
FY2016:: 11.5c, 8,5c
FY2017:: 12.5c, 9,5c
FY2018:: 13.5c, 10,5c
HY2019: 18.0c


The average annual dividend 20.6 cps fully imputed. 20.6c is equivalent to a gross yield of :
20.6c / (1-0.28) = 30.0c.

Current term deposit rates are around 3.5%. I would want a return two percentage points better than this to allow for the greater income volatility risk of share such as this. So my January 2019 valuation for RBD is:

30.0 / 0.055 = $5.45

This valuation is strictly from an 'income' perspective. With the share trading at $7.60 just prior to the 'Global Valar SI' takeover offer, this shows that there was a considerable growth premium built into the share price before the Mexicans came along. At an offer price of $8.90, there is now a huge growth premium built in. A premium I would suggest that can only be satisfied with a sustained push into Pacific rim markets.


I suspect that valuing RBD on an historical capitalised dividend valuation basis will not be realistic going forwards. Global Valar has got plans for growth. KFC / Pizza Hut concept owner YUM Brands is committed carrying out a sell down of almost all company owned restaurants, to their global franchisees, including the likes of Restaurant Brands, by the end of the calendar year just finished. (the remaining 2% of company owned restaurants on the books in December 2016 not yet sold would be sold down in due course).

Nevertheless, we can regard a capitalised dividend valuation as a 'base case' for a valuation. A middle of cycle business case valuation of $5.45, using my rule of thumb, gives a peak of cycle valuation 20% higher. That means $6.45. This is my target value for topping up my residual RBD holding in the future. That may sound far fetched.in today's heady price environment. But remember the cash issue price for the 26th October 2016 was just $5.15. And that was only two and one half years ago.

SNOOPY

[JayRiggs]

Today is the last day to accept the Global Valar offer.
When do we get our money? The takeover booklet isn't exactly clear.

When will I be paid if I accept the Offer?
3.5 If you accept the Offer, Global Valar will not pay you for any Restaurant Brands Shares to be acquired from you under the Offer until the Offer has closed.
As noted above, the closing date is 12 March 2019, being 60 working days after the date of the Offer.

Of course, the offer date was extended to 26th March 2019.
I'm assuming we get our money by end of today or tomorrow?
Strange how they say "Global Valar will not pay you for any Restaurant Brands Shares to be acquired from you under the Offer until the Offer has closed"
It'd be clearer if they said "Global Valar will pay you ..."

[artemis]

I think 5 working days after close, if unconditional which it is. Can't recall where I saw that though.

[Snoopy]

Today is the last day to accept the Global Valar offer.


Global Valar has announced to the market this morning, the day after the offer closed, that 91.32% of shares have been tendered. The Global Valar offer is for 75% of all shares. So those who have tendered their shares will not have all of them accepted.

75 / 91.32 = 0.8213

This means that for each parcel of 1000 shares submitted, 821 will be accepted. That's how I see the maths working out anyway, Having said that I am not sure what might happen if you owned 1000 shares and submitted only 821 into the offer. Would all 821 be accepted in that instance?

SNOOPY

[Bjauck]

Global Valar has announced to the market this morning, the day after the offer closed, that 91.32% of shares have been tendered. The Global Valar offer is for 75% of all shares. So those who have tendered their shares will not have all of them accepted.

75 / 91.32 = 0.8213

This means that for each parcel of 1000 shares submitted, 821 will be accepted. That's how I see the maths working out anyway, Having said that I am not sure what might happen if you owned 1000 shares and submitted only 821 into the offer. Would all 821 be accepted in that instance?

SNOOPY
That would not be fair on those who submitted 100% of their holding?

There may be a lot of very small shareholders left. I wonder if there will be a scheme to sell remnant holdings.

[Snoopy]

That would not be fair on those who submitted 100% of their holding?


This isn't about fairness Bjauck, What we are talking about here is the strict application of the law!

Section 4 in the offer document talks about the 'Scaling of Acceptances'.

---------

(a) the Offeror must take up from each Acceptor the lesser of:

(i) the number of that Acceptor's Shares that represents the Specified Percentage of shares held by that acceptor, and
(ii) the number of Shares in respect of which the acceptor has accepted the offer, and

(b) If the number of Shares that the Offeror takes up under clause 4.2(a) is less than the Specified Number, then the offeror must take up from the Surplus Acceptor, Shares which bear the same proportion to the Acceptor's Surplus Shares, as the balance of the Shares required by the Offeror to acquire the specified number bears to the total of all Surplus Shares.

--------

The 'Specified Percentage of shares held by that acceptor' is not the same as the number of shares submitted to the offer! My interpretation then is that our holder of 1000 shares who submits 821 for acceptance will get 750 of those accepted in step (a), leaving 821-750=71 in 'the surplus asking to be accepted' pool.

At the end of step (a), Global Valar should have 75% of 82.13% of shares , or 61.60% of shares tied up. This is short of the 75% target with another:

75% - 61.60% = 13.40%

of the total shares still on issue to be acquired to fulfill the takeover offer. However not all issued shares have been offered up to Global Valar:

100% - 92.13% = 7.87% of shares 'are off the table'.

The number of shares that are still 'on the table' are: 100% - 61.60% -7.87% = 30.53% of all shares.

The 13.40 'percentage points' of shares needed to make up the offer represents:

13.40 / 30.53 = 43.89% of that 'surplus asking to be accepted' pooll.

Our tenderer of 821 and owner of 1000 shares can therefore expect 43.89% of his 'surplus tendered shares' to be accepted as a 'bonus acceptance add on',

0.4389 x 71 = 31 shares.

So total shares accepted out of the 821 tendered should be:

750 + 31 = 781

This kind of ties in with what my broker told me what happens with index funds, His story was that they would submit just 75% of their index find shares into the offer (knowing thew offer was for 75% of all shares), expecting them all to be accepted. Not sure my broker is right on this issue. But it does tie in with the 'strict interpretation of the law' above.

SNOOPY

[Snoopy]

Section 4 in the offer document talks about the 'Scaling of Acceptances'.

---------

(a) the Offeror must take up from each Acceptor the lesser of:

(i) the number of that Acceptor's Shares that represents the Specified Percentage of shares held by that acceptor, and
(ii) the number of Shares in respect of which the acceptor has accepted the offer, and

(b) If the number of Shares that the Offeror takes up under clause 4.2(a) is less than the Specified Number, then the offeror must take up from the Surplus Acceptor, Shares which bear the same proportion to the Acceptor's Surplus Shares, as the balance of the Shares required by the Offeror to acquire the specified number of shares to the total of all Surplus Shares.

--------

The 'Specified Percentage of shares held by that acceptor' is not the same as the number of shares submitted to the offer! My interpretation then is that our holder of 1000 shares who submits 821 for acceptance will get 750 of those accepted in step (a), leaving 821-750=71 in 'the surplus asking to be accepted' pool.

At the end of step (a), Global Valar should have 75% of 82.13% of shares , or 61.60% of shares tied up. This is short of the 75% target with another:

75% - 61.60% = 13.40%

of the total shares still on issue to be acquired to fulfill the takeover offer. However not all issued shares have been offered up to Global Valar:

100% - 92,13% = 7.87% of shares 'are off the table'.

The number of shares that are still 'on the table' are: 100% - 61.60% -7.87% = 30.53% of all shares.

The 13.40 'percentage points' of shares needed to make up the offer represents:

13.4 / 30.53 = 43.89% of that 'surplus asking to be accepted' pooll.

Our tenderer of 821 and owner of 1000 shares can therefore expect 43.89% of his 'surplus tendered shares' to be accepted as a 'bonus acceptance add on',

0.4389 x 71 = 31 shares.

So total shares accepted out of the 821 tendered should be:

750 + 31 = 781




Section 4 in the offer document talks about the 'Scaling of Acceptances'.

---------

(a) the Offeror must take up from each Acceptor the lesser of:

(i) the number of that Acceptor's Shares that represents the Specified Percentage of shares held by that acceptor, and
(ii) the number of Shares in respect of which the acceptor has accepted the offer, and

(b) If the number of Shares that the Offeror takes up under clause 4.2(a) is less than the Specified Number, then the offeror must take up from the Surplus Acceptor, Shares which bear the same proportion to the Acceptor's Surplus Shares, as the balance of the Shares required by the Offeror to acquire the specified number of shares to the total of all Surplus Shares.

--------

The 'Specified Percentage of shares held by that acceptor' is not the same as the number of shares submitted to the offer! My interpretation then is that our holder of 1000 shares who submits 1000 for acceptance will get 750 of those accepted in step (a), leaving 1000-750=250 in 'the surplus asking to be accepted' pool.

At the end of step (a), Global Valar should have 75% of 82.13% of shares, or 61.60% of shares tied up. This is short of the 75% target with another:

75% - 61.60% = 13.40%

of the total shares still on issue to be acquired to fulfill the takeover offer. However not all issued shares have been offered up to Global Valar:

100% - 92,13% = 7.87% of shares 'are off the table'.

The number of shares that are still 'on the table' are: 100% - 61.60% -7.87% = 30.53% of all shares.

The 13.40 'percentage points' of shares needed to make up the offer represents:

13.40 / 30.53 = 43.89% of that 'surplus asking to be accepted' pool.

Our tenderer of 1000 shares can therefore expect 43.89% of his 'surplus tendered shares' to be accepted as a 'bonus acceptance add on',

0.4389 x 250 = 110 shares.

So total shares accepted out of the 1000 tendered should be:

750 + 110 = 860

Put another way, however many shares you put into the offer, if it was your whole holding, then you should have 14% of those 'prior total shares' left, once the offer is concluded. I think my maths and legal interpretation is right. But am happy to be corrected.

SNOOPY

[Bjauck]

Thanks for your reply and calculations Snoopy. I realise bringing up an undetermined notion of “fairness” was naive!

[Rep]

That would not be fair on those who submitted 100% of their holding?

There may be a lot of very small shareholders left. I wonder if there will be a scheme to sell remnant holdings.

The other way to look at it is that you received a premium for the shares accepted and you have to net the commission paid on selling the remnants off the disposal. It sounds like a lot to dispose of a small parcel but in context it was a lot better than what you could have sold the shares in total prior to the offer.

If Snoppy is correct THEN Those who offered 100% of their holdings will on the whole proportionally get more of the shares accepted under offer and have a higher weighted average exit price after commission than those who offered less. Reinforces that if you wanted to hold after offer then you have tried to cycle as many shares thru offer to realise max level of control premium.

I haven’t decided whether I will exit small holding after scaling or buy in to top up. I’ll see what price does first.

[blackcap]

The other way to look at it is that you received a premium for the shares accepted and you have to net the commission paid on selling the remnants off the disposal. It sounds like a lot to dispose of a small parcel but in context it was a lot better than what you could have sold the shares in total prior to the offer.

If Snoppy is correct THEN Those who offered 100% of their holdings will on the whole proportionally get more of the shares accepted under offer and have a higher weighted average exit price after commission than those who offered less. Reinforces that if you wanted to hold after offer then you have tried to cycle as many shares thru offer to realise max level of control premium.

I haven’t decided whether I will exit small holding after scaling or buy in to top up. I’ll see what price does first.

I am in that camp too. I tendered all my shares and was looking to top up if the price is right post offer. Happy to get $9.45 for my shares either way as the valuation was looking rather top heavy.

[Snoopy]

You won't be the only one blackcap.

Last years earnings were 32.7cps. So the $8.50 you are prepared to pay puts this on an historical PE of 26. There is quite a bit of future growth that you are banking to justify paying a share price like that!

Of course, that is not to say such growth is unattainable. But our Russel has already admitted that expansion by acquisition is not as profitable as expansion by organic growth. He has sort of hinted that down the line there will be a capital raising. Discounted shares will be available at that point I think. But when will that be? And how much will RBD raise? All unknown. The trigger might be RBD purchasing some KFC outlets on the western side of the United States.




I haven’t decided whether I will exit small holding after scaling or buy in to top up. I’ll see what price does first.

Since the offer is closed, the price has already done its thing. $8.87 is the new buy in price!

$8.87 / $0.327 = a PE of 27.1 (historical PE)

That seems pretty rich for an operator of someone else's restaurant concepts. Then again maybe this years result is a boomer. I am going to wait for a couple of weeks and find out. But on what I know now, I am not tempted to top up at $8.87. Not yet ready to give up my long RBD association and sell out completely though.

SNOOPY

[Zeitgeist]

So the money is in the bank account, but I've not received an email (or snail mail) as yet confirming how many shares I've been scaled down to.

I could calculate it myself based on the Offer Doc but would hate to get the wrong number (and take action on it!)

Has anyone received an official notice?

[blackcap]

So the money is in the bank account, but I've not received an email (or snail mail) as yet confirming how many shares I've been scaled down to.

I could calculate it myself based on the Offer Doc but would hate to get the wrong number (and take action on it!)

Has anyone received an official notice?

go to the computershare website and have a look. you can register for an account there that you can track your holdings, vote at AGM's etc. Quite handy at times.

[JayRiggs]

So the money is in the bank account, but I've not received an email (or snail mail) as yet confirming how many shares I've been scaled down to.

I could calculate it myself based on the Offer Doc but would hate to get the wrong number (and take action on it!)

Has anyone received an official notice?

I got the money too.
Based on the amount I received, 81.44% of my RBD shares were sold to Global Valar.

[JayRiggs]

I also checked my Computershare.
I can see the number of RBD shares subtracted from my balance, with transaction name "Takeover".

[dreamcatcher]

Friend just received payment $26941.95 for 3500 total shares = $7.6977c ........... he's not smiling

[blackcap]

Friend just received payment $26941.95 for 3500 total shares = $7.6977c ........... he's not smiling

Friend better check that it wasn't 2,851 shares that purchased off him in the deal after he had tendered 3500. That would be 81.45% of shares tendered accepted. About the same ratio as my offering/acceptance.

[Zeitgeist]

go to the computershare website and have a look. you can register for an account there that you can track your holdings, vote at AGM's etc. Quite handy at times.

Thanks - didn't even think to look there but it was exactly what I needed :t_up:

[Zeitgeist]

In hindsight that wasn't a very smart question. I could have simply taken the amount in the bank account divided by $9.45 to work out how many of my shares GV took.

If only I had blonde hair...

Dreamcatcher: suggest your friend checks their balance with Computershare