Insights

Domino’s (ASX:DMP) share price rises on acquisition news

This pizza chain operator’s global expansion continues…
The post Domino’s (ASX:DMP) share price rises on acquisition news appeared first on The Motley Fool Australia. –

The Domino’s Pizza Enterprises Ltd (ASX: DMP) share price is on course to end the week on a positive note.

In early trade, the pizza chain operator’s shares are up 2% to $116.60.

Why is the Domino’s share price pushing higher?

The catalyst for the rise in the Domino’s share price higher today has been the release of an acquisition announcement.

According to the release, the company has entered into a binding agreement with Formosa International Hotels Corporation to acquire the corporate stores and franchise rights held by Domino’s Taiwan for A$79 million on a cash and debt free basis.

The release notes that Domino’s Taiwan has the second largest pizza chain in the Taiwanese market, with a sophisticated network of 138 franchised stores and 19 corporate stores.

Furthermore, the stores are located across all major cities with substantial opportunity for further growth. In fact, management intends to significantly expand the business, with a long term aspiration of 400+ stores and delivering growth in its average weekly unit sales.

To help it achieve these goals, Domino’s plans to work with experienced local pizza experts who built a solid foundation in the market. It will also add its proven technology (including online platform OneDigital) and operational innovations.

In addition to this, the company expects to benefit from regional procurement, supply chain, and operational synergies through leveraging its existing capabilities in Japan and globally over a larger store network.

Domino’s Pizza Enterprises CEO & Managing Director, Don Meij, believes the Taiwanese market has significant potential.

He said: “This is a market with tremendous opportunity for our business and this acquisition provides similar opportunity for the local team. Our expansion focus has been on identifying opportunities with large total addressable markets and a stable economy – we look forward to bringing our High Volume Mentality to this business.”

“We have built centres of excellence in Australia/New Zealand, Europe and Asia, allowing us to complement local expertise in menu development and taste preferences with proven experience in technology, marketing, operations, and strategy and insights. Just as this approach has worked in Europe and more recently in Japan, we intend to apply the same lessons in the new market.”

“We intend to expand the store footprint through opening more corporate stores, introducing new, internal, franchisees to the network, helping existing franchisees profitably expand their businesses, and investing in the network and our people to drive long term growth.”

Earnings boost

The acquisition of Domino’s Taiwan is expected to give the company’s earnings a modest boost in the near term.

The acquired business delivered network sales of approximately A$73 million and earnings before interest, tax, depreciation and amortisation (EBITDA) of approximately A$4.8 million for FY 2020.

Based on this, the transaction is approximately 2% earnings per share accretive (excluding integration, reorganisation and transaction costs).

However, it may not stop at this acquisition. Management advised that it remains active in pursuing suitable additional markets as acquisition opportunities.

The Domino’s share price is up over 30% in 2021.

The post Domino’s (ASX:DMP) share price rises on acquisition news appeared first on The Motley Fool Australia.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of May 24th 2021

More reading

Why Zip (ASX:Z1P) and this ASX growth share are highly rated by analysts
Fund managers are buying Qantas (ASX:QAN) and this ASX share
Which ASX retail shares are the latest trade winners?

2 outstanding ASX 200 growth shares

ASX 200 down 0.15%: A2 Milk class action, Nuix crashes again

James Mickleboro does not own Domino’s shares. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Dominos Pizza Enterprises Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;


To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.


An active and funded account with a positive trading balance is required to continue to have access to the tools;


Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;


Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!