Domino's Pizza buys into Nordic operations

Quick-service food operator Domino’s Pizza Group announced a new strategic investment on Wednesday, committing £24m to acquire “significant minority interests” in Domino’s Iceland, Norway and Sweden while retaining existing strong local management.

The FTSE 250 firm said it also agreed a route to future majority ownership and control, in its negotiations with current owners Birgir Bieltvedt - the chairman and founder of Domino’s Iceland - and other investments.

Following the transaction, Domino’s Pizza Group will hold 49% of the Iceland operations and 45% of each of the Norwegian and Swedish businesses.

Domino’s Iceland was established in 1993 and currently operates 19 stores, the board said, generating EBITDA of £3m in 2015, while Domino’s Norway was established in 2014 and currently operates 10 stores.

There are currently no stores operating in Sweden, though Domino’s said the population of 10 million and no major pizza operator with a significant presence represented a substantial opportunity.

It is currently anticipated that the first Swedish stores will open by year-end, the company’s board explained.

The transaction is expected to be earnings-enhancing on an underlying basis for the group in 2017 and subsequent years, and realise significant shareholder value over time, it added.

It will fund the deal from cash and existing debt facilities, and expects to report the cost of investment in the transaction as part of the group’s gross assets.

“We are delighted to be investing in these exciting markets, which hold great potential for the group,” said Domino’s Pizza Group CEO David Wild.

“Our skills in e-commerce, marketing and supply chain will complement the excellent local know-how of our partners in Iceland, Norway and Sweden and help to grow the Domino's brand.

“This is a great deal for everyone concerned and we look forward to welcoming our new colleagues and customers,” Wild explained.

Chairman and founder of Domino’s Iceland, Birgir Bieltvedt, said the combination of two partners in the three markets, combines with the financial strength of Domino’s Pizza Group, will create a strong business in countries with significant potential for future growth.

“We have a talented and motivated team and are excited to start working alongside our UK partners in further developing the Domino's brand,” Bieltvedt said.

Domino’s Pizza Group added to the announcement, saying other trading remained in line with market expectations, with interim results due on 28 July.