RFG to buy Gloria Jean’s Coffees

Sarah Stowe

Gloria Jean’s Coffees is heading for a new home at the Retail Food Group.

RFG has entered into a Sale & Purchase Agreement to acquire Gloria Jean’s Coffees’ assets, including global intellectual property rights, operational management of Australian and US regions, and the franchisor of 40 licences international territories.

There are 358 domestic franchise outlets and 87 outlets of GJC and brand system It’s A Grind in the US.

RFG CEO Tony Alford described the opportunity as “compelling” and said Gloria Jean’s had been a long term target for the acquisitive multi-brand company.

“Gloria Jean’s Coffees genuinely transforms RFG into a global franchising powerhouse, driving outlet network population to circa 2,400, and providing the company with access to numerous international markets and new revenue platforms,” he said.

Alford said that the Gloria Jean’s Coffees business encompasses the ‘farm to cup’ story, including direct farm sourcing of green beans which are then roasted within the group’s Australian and American roasting and packaging facilities, for distribution to the world-wide franchise network and third party customers.

The deal will add weight to RFG’s existing coffee roasting business and opens up a new market, the in-home coffee experience, through a patented capsule delivery system supplied through a national supermarket.

MANAGEMENT TEAM

GJC executive chairman Nabi Saleh will remain with the business for at least two years. The senior management team will also join RFG.

Sabeh said “We have long known that Gloria Jean’s Coffees has extraordinary potential for growth but we couldn’t have been more impressed by how quickly RFG recognised this potential.”

Earlier this year GJC was set for acquisition by Singapore based firm but the deal collapsed. The RFG transaction is set for a December completion.

RFG will pay $163.5m to the vendor in cash ($153.5m) and RFG shares ($10m) on SPA settlement, and up to a further $16.4m conditional upon milestones and earn-out achievements.

The initial payment of $163.5m will be funded by a 60/40 combination of cash/debt and equity.