Dominos acquires large German pizza chain

Joey’s Pizza, Germany’s largest pizza chain, has agreed to a deal that will see it being bought out by the companies that own Domino’s Pizza in the United Kingdom and Australia.

Initial consideration is EUR45 million (A$69 million), with subsequent tiered payments for up to a further EUR34 million (A$52 million) contingent on earn out criteria.

Shares in Domino’s Pizza Enterprises have surged nearly 13 per cent as the company upgraded its profit guidance for the second time this year after biting off another slice of the European pizza market. The group’s European operations also include stores in Belgium, the Netherlands, and Monaco.

Don Meij, chief executive of Domino’s Pizza Enterprises, said that entering the German market represented a long-term growth opportunity.

The deal will help boost Domino’s full year profit and underlying earnings for fiscal 2016 by 30 per cent on the previous year’s results, up from the previous forecast of a 25 per cent rise.

The transaction is subject to regulatory and other approvals and is expected to complete in the first quarter of 2016.

The Joeys business is likely to generate sales of 143 million euros and underlying earnings of around seven million euros for the year ended December 31, 2015.

“Where we look at where we wanted to be, Germany was always one of those and it’s dream, when you’re coming into a market, to be able to get all that expertise that’s local from the incumbent”, he said.

The owners of Joey’s Pizza, Carsten Gerlach and Christian Niemax, added: “We see the benefits which Joey’s Pizza customers and franchisees will obtain from the association with a sophisticated global pizza operator who recognises the importance of our culture and the 27-year history of our business in the German market”.