Franchise Brands PLC (AIM:FRAN) has agreed a takeover of commercial kitchen services provider Filta Group Holdings PLC (AIM:FLTA) in an all-share offer valued at £49.8mln to create an enlarged group valued at just over £191mln.
Franchise Brands, the owner of franchises including Metro Rod, Willow Pumps, Ovenclean and Barking Mad, has agreed to pay 1.157 new share in exchange for each Filta share.
Based on FB’s last closing price of 147.5p this values Filta shares at 170.7p compared to the last close of 156.75p and a 12-month average of 145.7p.
The boards of the two companies have recommended the deal, believing it “has compelling strategic rationale, with the potential to deliver substantial benefits to customers, employees, franchisees, shareholders and other stakeholders of both Franchise Brands and Filta”.
Filta directors and their connected parties who control a combined stake of 62.1% have committed to backing the deal.
For Franchise brands, this follows the acquisition of franchise management software Azura Group in November.
Filta specialises in providing commercial kitchen services including cleaning fryers and "management" of grease and drains for restaurants, supermarkets, stadiums, healthcare, education, hotels and amusement parks in the UK, Europe and North America.
Filta’s chief executive Jason Sayers will join the Franchise Brands board as managing director of Filta and Brian Hogan will become group chief financial officer.
Stephen Hemsley, executive chairman of Franchise Brands, said: “As we operate in similar markets to Filta, we know the business well, so we are delighted that Filta will be joining Franchise Brands.
“Bringing the businesses together will enable us to offer a broader range of complementary services to our combined customer base, providing competitive advantages in our ambition to offer a ‘Water In, Waste Out’ service to commercial customers and significant opportunities for future growth.”
He said the benefit of greater scale will help drive future growth in revenue and profits, including by growing and developing Filta's UK and European franchise business, while also positioning for further expansion in North America, given Filta's successful franchise business in the region.
“The enlarged group will have a strong balance sheet, with a high level of liquidity, putting it in a strong position to support our franchisees, invest in the business and our people, pursue a progressive dividend policy and take advantage of selective complementary acquisition opportunities."