Gloria Jean’s Coffees To Be Acquired By Global Yellow Pages

GYP yellow pages logo Gloria Jean’s Coffees, Australia’s leading specialty coffee house with 800 coffee houses in 39 markets worldwide, including 400 locations across Australia, and a related intellectual property will be 100% acquired by Global Yellow Pages Limited (SGX: Y07), or GYP.

The global brand will be acquired from Tea & Coffee Traders Pty Ltd, which acts as a trustee for the Saleh Family Trust. Mr Nabi Saleh, an Iranian Australian businessman, is the Executive Chairman of Gloria Jean’s Coffees.

The business being acquired comprises all “Gloria Jean’s Coffees” and “It’s A Grind” intellectual property, the global supply chain operations and the master franchisor business for all Gloria Jean’s Coffees coffee houses over the world. It’s a Grind is a registered trademark of Praise International North America, Inc, which is the affiliate in North America for Gloria Jean’s Coffees International.

GYP believes there is significant room for further growth of the Gloria Jean’s Coffees brand in Asia, especially in People’s Republic of China. Mr Nabi Saleh is slated to continue to be linked to Gloria Jean’s Coffees and will retain interests in the Master Franchisee business for Australia, USA and China.

The acquisition will be funded by a combination of cash and new shares of GYP. The company will be undertaking a rights issue and is planning to raise a total of up to S$62.9 million. The rights issue will also shore up the firm’s financial capability.

Up to 1,257,682,564 shares at an issue price of S$0.05 each will be offered, on the basis of 3 right shares for every 2 existing ordinary shares. One free detachable warrant for each rights share will be offered as well.

The shareholders of GYP have to say aye to the proposed acquisition and the rights issue at a general meeting to be convened, before they go through.

Mr. Mah Bow Tan, Non-Executive Chairman of the company, said, “This is a significant step in our on-going strategy to diversify into other business areas, in particular the food and beverage sector. The acquisition of Gloria Jean’s Coffees is an exciting opportunity for GYP to acquire a leading global coffee business with tremendous growth potential. The coffee drinking culture is growing fast in many Asian countries and we believe that this acquisition will provide GYP with a platform to tap into this growing trend in Asia, especially China. I am delighted that Mr. Nabi Saleh will continue to be closely involved with Gloria Jean’s Coffees. I am convinced this acquisition, together with the ongoing support of Mr. Saleh and our significant shareholder, Mr. Sam Goi, will help to grow shareholders’ value.”

Mr. Nabi Saleh said, “I am excited to have the opportunity to continue to be closely involved with Gloria Jean’s Coffees and I am highly confident that the Gloria Jean’s Coffees brand can reach even greater heights under GYP’s ownership.”

GYP also has a 20.02% interest in Yamada Green Resources Limited (SGX: MC7), a major supplier of edible fungi, operating one of the largest mushroom cultivation bases in Fujian Province, People’s Republic of China.

In the first half of Financial Year 2014, GYP made a loss of S$1.7 million. For the past five years, the stock has slumped 50% overall while the Straits Times Index (SGX: ^STI) has gained 76.3%.

The shares last changed hands at $0.095 on Friday and is trading at a price-to-book ratio of 0.85.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice.  Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.