DP Eurasia, the master franchisee of the Domino's Pizza brand in Turkey, Azerbaijan, and Georgia, has responded to the revised cash offer made by Jubilant Foodworks Netherlands for the remaining shares of the company. The non-conflicted members of DP Eurasia's board have stated that they would consider recommending an offer price that reflects the fair value of the business, but the revised offer price of 95 pence per share is not considered fair. The board has consulted with key institutional shareholders, who have unanimously stated that they do not currently intend to accept the revised offer. As long as this status quo is maintained, Jubilant Foodworks cannot delist the company or squeeze out minority shareholders without their support. The board intends to use this shareholder support to encourage Jubilant Foodworks to offer a fair price that the board can recommend and shareholders are willing to accept.
The board has also responded to certain statements made by Jubilant Foodworks in its announcement, correcting what it believes to be wrong, misleading, or highly subjective statements. The board is glad that Jubilant Foodworks has undertaken, through its offer document, that all shareholders accepting the revised offer will benefit from any price increases offered by Jubilant Foodworks during the period of the revised offer. The board hopes that this should provide comfort to shareholders. The board also observes with surprise that Jubilant Foodworks sets out in great detail the options it would have to squeeze out minority shareholders if the company were to be delisted, while not offering any matched bargain or other liquidity mechanism to provide shareholders an exit beyond January 18, 2023.
Regarding valuation, the board notes that valuation is inherently subjective and that it carefully considered a range of methodologies to arrive at a valuation range that has been communicated to Jubilant Foodworks. The board chose to show a range of Domino's Pizza multiples as illustrative of that range before accounting for the hyper-inflationary environment in Turkey. Jubilant Foodworks argues that it is offering a higher implied multiple by using year-end spot exchange rates to determine GBP equivalent values, resulting in the calculation of a depressed GBP EBITDA. The board remains of the view that it is customary to use average exchange rates for the relevant period for income statement items. Jubilant Foodworks also argues that the DP Eurasia share price remained below the 2021 hostile reverse bookbuild offer price, but the board points out that this is due to the low trading volume in DP Eurasia shares, the loss of the company's Russian business, and Turkey's hyper-inflationary environment. The board also notes that Jubilant Foodworks seeks to challenge broker forecasts as unreliable, while not acknowledging that the company's profit forecast is in excess of those forecasts.
The board, with advice from its financial advisors, Liberum, is unanimous in not recommending the revised offer and urges minority shareholders to take no action. The board remains committed to continuing negotiations with Jubilant Foodworks.