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Jubilant FoodWorks hits fresh 52-week high on Fides acquisition

Our Bureau Mumbai | Updated on February 22, 2021

Netherlands-based Fides Food Systems holds 32.81% stake in DP Eurasia, the exclusive master franchisee of Domino’s Pizza in Turkey, Russia, Azerbaijan and Georgia

The shares of food services company Jubilant FoodWorks Ltd (JFL) hit fresh highs on Monday after the company announced it will acquire Netherlands-based Fides Food Systems Coöperatief UA.

At 10:48 am it was quoting ₹3084.45 per share on BSE, up ₹133.40, or 4.52 per cent. It hit a 52-week high of ₹3,098.55. It opened at ₹2970.00 as against the previous close of ₹2951.05.

On NSE, it was trading at ₹3,085.70, up ₹134.45, or 4.56 per cent. It hit a 52-week high of ₹3,099.25.

The company on Friday had announced it will fully acquire Fides Food Systems Coöperatief UA, Netherlands (Fides), for an agreed investment of approximately £24.80 million (about $35 million) through its wholly owned subsidiary Jubilant Foodworks Netherlands BV.

Fides holds 32.81 per cent stake in DP Eurasia, the exclusive master franchisee of Domino’s Pizza in Turkey, Russia, Azerbaijan and Georgia.

DP Eurasia (together with its subsidiaries) offers pizza delivery and takeaway/eat-in facilities at 771 stores (568 in Turkey, 190 in Russia, nine in Azerbaijan and four in Georgia as on December 31, 2020), as per the official press release.

Jubilant Foodworks Netherlands BV and Jubilant FoodWorks Ltd (acting as a guarantor for investment obligation of its wholly owned subsidiary) has entered into a purchase agreement with Turkish Private Equity Fund II LP, which is the sole member of Fides, to execute the transaction.

Neutral outlook

Analysts remain neutral on the acquisition. Emkay has maintained a Buy rating on the stock with a target price of ₹2750.

“Although the acquisition gives JUBI access to Domino’s franchises in new markets at an attractive valuation, adverse currency movements and high interest rates in Turkey remain a risk and can elongate expected turnaround, resulting in earnings dilution for JUBI. (TRY has depreciated by more than 50 per cent in last five years vs INR.) Given the size of the acquisition, we do not expect any meaningful upside/downside to our forecasts,” it said.

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Published on February 22, 2021
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