KKR acquires controlling stake in Telepizza in €604m deal

The deal gives the company an equity value of €604m and an EV of €748m, including €144m in debt. This equates to around 11x the company's 2018 EBITDA of €65.2m.

With this acquisition, KKR, which already owns a 28.57% stake in the company, will reach a 56.29% ownership and will be able to de-list Telepizza from the Spanish stock exchange.

The bid was launched by KKR through the company Tasty Bidco and saw the acquisition of 27,928,965 shares, representing 38.82% of the target shares and 27.73% of the total share capital, at a price of 600 cents per share, for a total of €167.57m.

The announcement followed the GP's decision to waive the minimum limit of 46,769,648 shares – equal to 46.44% of the share capital of Telepizza – established as a condition for the bid.

Initially, the offer launched by the GP in December 2018 was conditional on the shareholders accepting at least 90% of the target shares. Several shareholders, including funds managers Bestinver, Perpetual and Highclere International, were not keen on this offer and requested a price increase to 700 cents per share. Subsequently, KKR adjusted its offer in March 2019 by decreasing the conditional percentage to 75%, but did not increase the offering price.

Unquote understands that Citigroup, Barclays, Mizuho and Banco Santander underwrote the financing for KKR's bid for Telepizza. The financing included the issuance of €335m 6.25% senior secured notes due in 2026, a senior secured bridge facility and a revolving credit facility.

According to a statement, the amounts drawn under the bridge facility will be used to acquire the ordinary shares of Telepizza. Pending consummation of the acquisition and certain other conditions, the proceeds of the notes will be deposited into an escrow account. Upon release from escrow, the proceeds will be used to repay the amounts outstanding under the bridge facility and to repay certain existing indebtedness of Telepizza and its subsidiaries.

Previous funding
In 2006, Permira led an €850m take-private alongside Telepizza's family owner. In October 2014, KKR entered the company's shareholding by acquiring a 36% stake for €180m as part of a wider refinancing deal.

The company was listed in April 2018. Shares were offered at 775 cents apiece, nearer to the low end of the 700-950 cents price range. The offering gave the company an initial market cap of €780.6m. Selling shareholders Permira and KKR received proceeds of €431m, while the primary portion of the process raised €118.5m.

Prior to the offering, Permira had a 51% stake in the business, while KKR owned a 24.5% stake. Backers include Cyrus Investment Management (4.4% stake), Oak Hill Capital Partners (2.3%), 3i (2.1%), Babson (1.1%), Allcentra (1.1%) and the management team (1.4%).

Following the transaction, Permira and KKR owned a 12.8% and a 7.4% stake in the business, respectively.

Subsequently, KKR bought additional shares in the business and increased its shareholding to 28.57%.

Company
Established in 1987 and headquartered in Madrid, Telepizza manages a pizza delivery business which operates a network of owned and franchised stores in 39 countries worldwide. The company entered in a franchise alliance with Pizza Hut International in December 2018, which is expected to double its store portfolio and increase its revenues.

Telepizza generated EBITDA of €65.2m, system sales of €636m and revenues of €340m in 2018. It reported net debt of €144m, equal to 2.2x its EBITDA. The company expects to reach EBITDA of €75-80m and system sales of €1.2bn in 2019.

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• Topics
• Buyouts
• Southern Europe
• Consumer
• KKR
• Spain
• Citigroup
• Barclays
• Take Private