Happy Belly Food Group has signed a definitive agreement for the acquisition of the Canada-based boutique quick service restaurant (QSR) brand Rosie's Burgers.
As part of the agreement, the two companies will establish a joint venture company (JVCo) for the implementation of corporate franchise expansion and the growth of Rosie's Burger outlets.
Happy Belly will also issue its common shares to the JVCo that are equal in value to $250,000, based on the ten-day volume-weighted average price (VWAP) at the time of closing for 50% ownership of the JVCo.
This signifies that the shares received by JVCo will be equally owned by Happy Belly and the owners of Rosie's Burgers in exchange for Rosie's Burgers franchising rights, brand assets and intellectual property (IP) rights.
In addition, Happy Belly has the right to acquire the remaining 50% of the business.
The deal is expected to close within the next ten business days.
Happy Belly chief investment officer Sean Black said: “With the signing of this definitive agreement for an asset-light franchising model, we look forward to working with Rosie's founders and their team as we focus on an accelerated franchise development model and real estate growth plan for across Canada.”
Rosie's Burgers, which currently owns and operates two locations, offers a variety of items such as smash burgers, poutine, onion rings and milkshakes.
The latest deal is in line with Happy Belly’s strategic plan to deliver shareholder value through accretive mergers and acquisitions.
Once completed, this accretive transaction is projected to help Happy Belly in promoting its immediate organic growth via Rosie's Burgers’ existing locations and net new franchised locations.
The new locations, which are set to be established throughout the remainder of 2023, are being opened as part of Rosie's Burgers’ aggressive Canada-wide franchising programme.
Happy Belly said that the process of finding suitable locations for Rosie's Burgers’ new restaurants is currently underway.
Black added: “After announcing our entry into franchising in March of this year, we are excited to add Rosie's Burgers to our franchised operations as our fourth franchised brand.”
