DP Eurasia turns nose up at new £140m takeover offer, lifts profit guidance

Shares in DP Eurasia, the UK-listed franchisee of Domino's Pizza stores in Turkey, Azerbaijan and Georgia, shot up on Tuesday after the board recommended against an increased takeover offer by majority shareholder Jubilant Foodworks Netherlands.

After offering 85p per share last month for the company, Jubilant on Tuesday raised its bid to 95p per share, valuing the company at just under £140m. This represents a 38.7% premium to the closing price on 27 November the day before the first offer was made.

Recent share purchases have lifted Jubilant's holding to 51.5%, meaning that it had to make a mandatory bid for the company under trading rules.

DP Eurasia said the "non-conflicted members of the board" believe the new offer is still "significantly below what they consider to be the fair value", particularly in light of current trading which is stronger than expected.

The company said the offer implies a valuation multiple, on an enterprise value-to-EBITDA basis, of just 6.5x on current-year estimates, compared with the other Domino's Pizza franchisee groups which trade at an average of 18.3x.

"As a result, the board, having taken advice from its financial advisors, Liberum, has concluded that it is not recommending the revised offer and continues to urge minority shareholders to take no action," the company said.

DP Eurasia used the statement to reveal that EBITDA for the 2023 financial year will "marginally exceed" the guidance of 696m Turkish lira (£18.8m) given last month. The company is now guiding to EBITDA of TRY 713m for the year, growing to TRY 1.25bn in 2024.

The stock was up nearly 10% at 96p by 1100 GMT.