Lagardère Travel Retail swoops to acquire US airport restaurateur Hojeij Branded Foods

Gregg Paradies: “This acquisition will accelerate our growth and enable us to achieve our goal of becoming one of the largest and best airport restaurant operators in North America.”

USA. Lagardère Travel Retail is to acquire Hojeij Branded Foods (HBF), a leading airport restaurateur in North America.

The acquisition value amounts to US$330 million (or US$393 million gross of partners’ share), implying a multiple of seven times HBF’s estimated full-year 2018 pro forma EBITDA including recurring synergies.

The completion of the transaction is subject to a number of conditions, including regulatory approval and third-party consents and is expected to close during the third or fourth quarter of this year.

The move is in line with Lagardère Travel Retail-owned Paradies Lagardère’s strategy to strengthen its position as a major restaurateur in North American airports. The combined activities of Paradies Lagardère and HBF create the third-largest operator in the North American airport travel retail and restaurant industry, said the group. With operations in more than 100 airports, annual sales will exceed US$1.2 billion, with US$350 million from food & beverage. The HBF management team, led by Regynald Washington, will remain at the helm of the company to facilitate its integration.

Dag Rasmussen: “Together, we will aim to create a regional leader and break new ground.”

Paradies Lagardère President and CEO Gregg Paradies said: “We are delighted to join forces with HBF, an industry leader that shares our same commitment to quality, first-class customer service, and a family culture. This acquisition will accelerate our growth and enable us to achieve our goal of becoming one of the largest and best airport restaurant operators in North America.”

Lagardère Travel Retail Chairman and CEO Dag Rasmussen said: “This acquisition strongly reinforces the presence of Lagardère Travel Retail in the food services industry and is in line with our strategy to grow in the three segments of travel retail: duty free and luxury, travel essentials and foodservices. We are very pleased to welcome HBF into our group. Together, we will aim to create a regional leader and break new ground.”

HBF CEO Regynald Washington added: “Combining the forces of HBF and Paradies Lagardère is a natural fit as both companies are recognised for operational expertise, top-notch guest service, and a strong commitment to employees.”

Lagardère Group General and Managing Partner Arnaud Lagardère commented: “This transaction is fully in line with the Lagardère group’s strategic refocusing, with priority given to developing the Lagardère Publishing and Lagardère Travel Retail businesses. In particular, it illustrates the re-use of proceeds from disposals in activities that provide significant operating synergies and are therefore accretive to group recurring EBIT and cash. Lagardère Travel Retail is continuing on its growth path in the USA with a proven and effective team.”

Lagardère Group’s transaction overview, with an outline of HBF’s portfolio and an assessment of synergies below (click to enlarge charts)

The companies said that the synergies in “operations, culinary expertise and customer innovations will offer an exceptional restaurateur with approximately 100 brand partners and proprietary concepts ranging from full service to fast casual and quick serve”. The combined brand portfolio includes Vino Volo, Chick-fil-A, P.F. Chang’s, Pei Wei, Bar Symon by Chef Michael Symon, illy Caffè, Longhorn Steakhouse, and Cat Cora.

Vino Volo: Acquired in 2017 by Hojeij Branded Foods amid a period of expansion at North American airports

Reaction from the investment community

Bank of America Merrill Lynch noted: “Lagardère indicates that the total consideration of US$330 million implies an EV/EBITDA multiple ‎of 7x including synergies or 8.9x pre-synergies. We note that this is broadly in line with what Lagardère previously paid for Paradies (7.5x including synergies) and transactions observed in the industry. Also this is before partners’ share (i.e. third party interest in JVs). Including these would suggest pre and post synergies multiples of 10.7x / 8.4x. The transaction is expected to close by Q4 2018 and we estimate would take Lagardère ND/EBITDA to 2.5x before Active / Sports disposals.”

On the trading impact for Lagardère shares it added: “The transaction is in line with Lagarderes strategy to focus on its Publishing and Travel Retail divisions and we expect it to be taken well in the near term given the reasonable multiple and expected synergies. However we believe that travel retail is facing longer term challenges notably on margin from concession renewals. We maintain our Underperform rating.”

About HBF

Founded in 1996 by Wassim and Kathy Hojeij, HBF is one of the leading airport restaurant operators in North America. Headquartered in Atlanta, it runs more than 124 bars and restaurants in 38 airports across the USA and Canada.
In 2017, HBF generated total sales of US$225 million. In 2017 it acquired Vino Volo, the largest airport wine bar and wine retail brand in the USA and Canada.

NOTE: The Moodie Davitt Report also publishes The Foodie Report, the world’s only media focused on airport (and other travel-related) food & beverage. The Foodie Report e-Newsletter is published every two weeks and The Foodie Report e-Zine every month.

Please send all news of food & beverage outlet openings, together with images, menus, video etc to Martin@MoodieDavittReport.com to ensure unrivalled global exposure.

The company also organises the annual Airport Food & Beverage (FAB) Conference & Awards. This year’s FAB took place on 20-21 June in Helsinki.

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