Savor Limited to acquire Hipgroup venues; Amano, Ortolana and The Store

AUCKLAND: Savor Limited has agreed to acquire the Hipgroup venues; Amano, Ortolana and The Store, as part of its focus on growing its hospitality business, a news release said.

The purchase price comprises a cash payment of $7.15 million on completion, $1 million of ordinary shares in Savor Limited to be issued on completion (subject to an 18 month restriction on trading), and a deferred cash payment of $2.85 million to be paid 12 months from completion date. The agreement is conditional on finalisation of debt funding arrangements.

Hipgroup is a market leader within the New Zealand hospitality industry, comprising well-known, award-winning brands in Amano, Ortolana and The Store.

The venues are located in Auckland’s premier hospitality precinct, Britomart, strategically expanding Savor’s footprint in the flagship area and cementing Savor Group’s position as a leader in the hospitality industry.

The acquisition will be immediately accretive to Group earnings, with incremental annualized operating earnings (or EBITDA) of circa $3 million.

Alongside this, Savor Group expects scale benefits from leveraging its current overhead structure and to achieve both revenue and operational synergies.

The acquisition of these venues, combined with the divestment of Moa Brewing, provides the Group with a solid financial base for future growth. Moa Brewing accounted for approximately $1.5 million of working capital funds and over $1.6 million of overhead costs annually.

The divestment has significantly simplified the operations of the Group, removed the loss making division and with it, several material business risks.

The Group is now in a strong position to secure greater access to financing and capital opportunities to fund its future growth plans as required.

The agility and resilience Savor Group displayed in response to Covid-19 restrictions over the past 12 months has resulted in a solid blueprint for lockdown response, that can be rolled out across the business, including to the new Amano venues, should further restrictions be mandated.

The business was able to quickly reshape financial fundamentals, revise menus and product offerings alongside optimizing operating hours and staffing levels to reset the cost base.

Lucien Law, Chief Executive Officer of Savor Limited, said: “These venues are a unique offering within the New Zealand hospitality industry, and we are thrilled to be adding to our existing brands through this acquisition.

The venues are extremely popular and provide consumers with an outstanding dining experience with sustainably sourced produce and an award-winning bakery that will enhance the breadth of our offering, such as having all-day service, and widen our footprint in the region.

Amano has been remarkably resilient on a like-for-like basis through COVID, compared to competitors, and is well positioned to bounce back when normal trading resumes”.

Geoff Ross, Chairman of Savor Limited, said: “Looking ahead, Savor’s growth strategy is two-fold and will focus on opportunities to build on existing brands, throughout New Zealand, as well as acquiring new sites. The Group is poised to leverage the right opportunities with the support of its expert management team and strengthened balance sheet. “

Jackie Grant, Managing Director of Hipgroup Limited, commented: “The development and success of our venues and our people has been a significant achievement for Hipgroup, one of which we are immensely proud. Ortolana and The Store were anchor tenants in 2013 when the Britomart precinct was first developed and we’ve always believed in the precinct, which led to Amano opening in 2016.

All three venues encompass our ethos of value, quality, and care. While the decision to sell was not taken lightly, I am delighted that these venues will go forward under the careful ownership of Savor. I have no doubt that Savor will continue the growth and creativity, but most importantly, look after our amazing and dedicated teams, leaders, and customers.”

The transaction is expected to settle on 8 April 2021 and is to be funded through a combination of new debt financing of $7 million and additional equity capital by way of a fully underwritten rights issue intended to raise $6 million at 17.67 cents per share.

The equity underwriters comprise existing substantial shareholders and new professional financial investors. Further details of the intended rights issue will be advised shortly.

Post transaction, Savor is expected to have approximately $7 million cash in a growth fund, which will strengthen its Balance Sheet and position it for expansion.

Savor Group, established in 2011, is one of New Zealand’s largest hospitality businesses with 13 iconic venues in Auckland, including Azabu Ponsonby, Azabu Mission Bay, Ebisu and Non Solo Pizza, each with its own unique concept, culture and offering.

Savor has a reputation for originality, the quality of its products and the high standard of service that is consistent across the company portfolio.