LONDON: Domino’s Pizza Group (DPG) announced, conditional on shareholder approval, it has agreed to sell its entire shareholding in DP Norway (Domino’s Norway) to Pizza Holding AS and EYJA Fjarfestingafelag III EHF, the existing minority shareholders in Domino’s Norway.

DPG will sell its 71% interest in Domino’s Norway to the Minority Shareholders for consideration comprised of a combination of the payment of a nominal amount (NOK 1) in cash and the transfer by the Minority Shareholders’ of their entire shareholdings in Domino’s Sweden to DPG, which will result in DPG owning 100% of Domino’s Sweden.

DPG will fund DP Norway for the period up to completion inclusive of a marketing campaign of NOK 6 million (£0.5 million). Such funding, alongside the existing intercompany receivable owed by DP Norway of NOK 360.4 million as at 31 December 2019 (approximately £30.0 million) will be converted into one share in Domino’s Norway and transferred to the Minority Shareholders at Completion as part of the company’s shareholding in DP Norway.

The equitisation of the existing intercompany receivable will have no cash impact on DPG or impact the group profit and loss statement of DPG.

In addition, on Completion DPG will fund certain identified future liabilities of Domino’s Norway (including the anticipated costs of closure of certain non-performing stores), expected in aggregate to be up to approximately NOK 34.0 million (being approximately £2.9 million) which is subject to reduction through DPG’s procuring the closure of certain stores or settlement of certain liabilities prior to Completion.

DP Norway will also retain NOK 24.4 million (approximately £2.0 million) of cash held within the business as at 31 December 2019, which includes an adjustment for normalized working capital, and rent deposits of NOK 10.6 million (approximately £0.9 million).

The transaction follows the announcement of 17 October 2019 regarding the Group’s intention to exit its directly operated international operations in an orderly manner, and find more suitable owners for these businesses.

Domino’s Norway has incurred operating losses for a number of years and required high levels of capital expenditure to fund organic new store growth, the Dolly Dimple’s acquisition and store conversions.

It has therefore required ongoing funding support from DPG. Following Completion, funding previously allocated to Domino’s Norway will be retained within DPG. The Transaction will also allow DPG management to focus on the core business and the orderly exit from the remaining directly operated international businesses.

The transfer of minority interests in Domino’s Sweden to DPG as part of the Transaction is expected to simplify DPG’s disposal of its Swedish business in due course.

Domino’s Pizza International Inc, the brand owner, is also supportive of the Transaction.

Subject to shareholder approval being obtained it is anticipated that completion of the transaction will occur by the end of May 2020. In the event that shareholder approval is not obtained, DPG will pay the Minority Shareholders a £1 million break fee.

Commenting on today’s announcement, David Wild said: “We are today announcing the disposal of our Norwegian business to its minority shareholders, subject to shareholder approval. This transaction is positive for all stakeholders and also provides DPG with a clean exit from Norway following operating losses and high levels of capital expenditure over a number of years. The new owners have exciting plans for the business and importantly, the Domino’s brand will retain its presence in Norway.

“Now we have agreed the transaction for Norway, we will focus on progressing transactions for our businesses in Sweden, Switzerland and Iceland. We are focused on securing the best possible terms for shareholders and are working closely with Domino’s International throughout. We will update the market in due course.”

Eirik Bergh of Pizza Holding AS said: “This is great news for our hard working store colleagues, our loyal pizza fans and our supply chain partners. We believe Domino’s is the best pizza in the world and we’re delighted to ensure this brand will remain in Norway. I’m confident our in depth knowledge of Norwegian consumers is key to unlocking the potential of Domino’s in this important market. The management team and I have lots of exciting plans and innovations we’re looking forward to sharing.”

Edited by Kiran Khan