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  • Stock Specialist

Domino's takes a slice of Taiwan market

Domino’s Pizza Enterprises announced it would acquire the corporate stores and franchise rights held by Domino’s Taiwan, for approximately A$79 million. Domino’s Taiwan has the second-largest pizza chain in the market, with a sophisticated network of 138 franchised stores and 19 corporate stores. Stores are located across all major cities with substantial opportunity for further growth.


The business to be acquired delivered network sales of approximately A$73 million and earnings before interest, tax, depreciation and amortisation of approximately A$4.8 million for FY201 under its current ownership.


As it has done in other acquired markets, Domino’s intends to significantly expand the business with a long term aspiration of a 400+ store footprint and growing average weekly unit sales. They expect to work with experienced local pizza experts, to integrate the company’s proven technology, including online platform OneDigital, along with operational innovations.


Over time, Domino’s also expects to benefit from regional procurement, supply chain and operational synergies through leveraging DPE’s existing capabilities in Japan and globally over a larger store network. With a population of more than 23.5 million people, the addition of Domino’s Taiwan to DPE’s portfolio will expand the Asian market by more than 18%, to almost 150 million people.


Domino’s Group CEO & Managing Director Don Meij said the company believed there is significant potential to open more stores, closer to customers, throughout the market. “This is a market with tremendous opportunity for our business and this acquisition provides similar opportunity for the local team. Our expansion focus has been on identifying opportunities with large total addressable markets and a stable economy – we look forward to bringing our High Volume Mentality to this business. We intend to expand the store footprint through opening more corporate stores, introducing new, internal, franchisees to the network, helping existing franchisees profitably expand their businesses, and investing in the network and our people to drive long term growth.”


The transaction is expected to complete in the first half of FY22, subject to local regulatory approval.


Domino’s also noted it remains active in pursuing suitable additional markets as acquisition opportunities


Acquisition consideration and funding


The purchase price of approximately A$79 million will be payable on completion of the transaction and will be financed from cash and debt facilities. On an FY20 pro-forma basis, the transaction is approximately 2% earnings per share accretive (excluding integration, reorganisation and transaction costs).


Based on the timing of completion, the realisation of synergies and expected digital investments to align platforms to the broader DPE network, the transaction will have no contribution to DPE’s FY21 financial result and is only expected to have a marginal positive contribution to DPE’s FY22 underlying earnings.