Jack Cowin, owner of Competitive Foods and Hungry Jacks, is negotiating to sell his company's KFC stores to an unidentified, mystery buyer.
As The Australian Financial Review reports:
The divestment would appease Yum! which took Competitive Foods to the Federal Court in early 2012 over a disagreement which hinged on Yum! giving notice eight years ago that it would not agree to new 20-year franchise agreements (a standard length) for Competitive's KFC outlets.
Yum!, which owns the KFC brand, of which Cowin has about 40 stores, gave notice such a long time ago because it considered Cowin's involvement in Domino's to be a competitor to Yum!'s Pizza Hut, and therefore against the terms of the KFC franchise agreements. Cowin's Somad Holdings owns 26.5 per cent of Domino's.
But who has emerged to buy Cowin's 40 or so KFC restaurants? One likely suspect is Collins Foods (ASX: CKF) which operates KFC stores in Queensland. Despite lacklustre operations, the company has considered expansion.
Collins Foods has failed to impress investors following its float in 2011, with the shares down some 16% since. Over the same period, the S&P/ASX 200 index (Index: ^AXJO) (ASX: XJO) has returned 20% and competitors from Domino's (ASX: DMP) to Retail Food Group (ASX: RFG) have done even better, rising some 120% and 65% respectively.
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The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool writer/analyst Catherine Baab-Muguira does not own shares in any of the companies mentioned in this article.
