Mexico’s Alsea Grabs Italian Chain

Mexican food and beverage franchise operator Alsea has purchased Italcafe, the parent company of Mexico’s Italianni’s restaurant franchise, in a transaction valued at MXP2.05bn ($149.5m). The deal includes the purchase 8 Italianni units as well as an 89.8% stake in Grupo Amigos de San Miguel, which controls 34 of Italianni’s restaurants across the country. The purchase also includes the fee use of the Italianni’s brand name for up to 30 years, free of franchise royalties. An Alsea spokesman declined to offer any more details on the transaction or reveal advisors until Alsea holds a press conference, scheduled for Monday. The Alsea document does point out, however, that the companies agreed to an enterprise value-to-Ebitda multiple valuation of 8.5x, assuming an Ebitda of the last 6 months up until June 2011 of MXP241.5m ($17.6m). Notably, the deal includes a clause that allows Italcafe to cancel the sale if a due diligence review now underway determines an Ebitda of less than MXP218m ($15.9m). At that level, the 8.5x multiple agreed by the parties would yield a $135.15m price tag for the Italcafe franchise. Alsea said it plans to finance the deal with the help of 4 loans obtained from HSBC, Banamex, Santander and BBVA Bancomer, at tenors of 5 years each. Alsea is known as the operator for brands such as Starbucks, Dominos Pizza and Burger King in Mexico. Company officials have expressed an interest in expanding locally and in other parts of South America.