| Acquisition of Aroma Ltd |
| 02 April 2002 |
CAFFE NERO GROUP PLC
Acquisition of Aroma Ltd
Caffe Nero Group plc, the leading independent, European-style coffee bar operator, announces the acquisition of Aroma Ltd for £2.15 million.
Caffe Nero Group Plc ('Caffe Nero') today announces the completion of the acquisition of Aroma Ltd ('Aroma') from McDonald's Corporation.
In acquiring Aroma Ltd, Caffe Nero has bought a chain of 31 coffee bars operating in the UK and the rights to the Aroma brand worldwide (excluding Switzerland and Argentina). The acquisition establishes Caffe Nero as the largest UK independent coffee house group with a total of 106 coffee bars (after disposing several of the Aroma units).
The Aroma sites are situated in principal locations throughout London and major UK towns and cities and are an excellent fit with the Group's existing estate. It is the directors' intention to convert the Aroma outlets to the Caffe Nero coffee bar format. It is anticipated that the conversions will be completed within the next few months at a typical cost of £60,000 per unit. The directors believe that, in converting the Aroma stores to the Caffe Nero brand and by controlling margins, considerable profit can be derived with only a minor
additional overhead spend.
Caffe Nero has purchased the entire share capital of Aroma for a cash consideration of £2.15m. A further payment, ranging from £0 to a maximum of £640,000, is being held in escrow for a period of six months until a number of
remaining Aroma sites, which Caffe Nero may not wish to retain, are sold. Caffe Nero will not be taking on any liabilities of Aroma Ltd, with the exception of statutory Head Office redundancy costs anticipated at 140,000.
In 2001, the acquired Aroma coffee bars produced a turnover of £9.2m and an operating loss of £3.7m. The book value of the Aroma coffee bars is £3.0m.
On acquisition, a fair value adjustment will be made to reflect the conversion of the sites to a Caffe Nero format. In addition, there will be an
exceptional charge for the Aroma Head Office redundancy costs, costs relating to recruitment and retraining and other brand conversion costs.
Commenting on the transaction, Gerry Ford, Chairman, said:
'The acquisition of Aroma is an important strategic move for Caffe Nero. It gives the Group a quantum leap in increased scale on the high street and accelerates the expansion of our brand considerably.'
'Following a brief period of conversion, the directors anticipate that the acquisition should make an important contribution to Group profits and demonstrates the directors' confidence in the Caffe Nero brand concept.'
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