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Domino’s have knock-on effect in Switzerland

The UK’s leading pizza delivery group, Domino’s UK, have branched out into the European market to acquire the Swiss part of the business.

Domino’s announced the deal on Wednesday morning on the London stock exchange, and will purchase Domino’s Switzerland for a maximum consideration of £4.67m cash, and a further amount for cash in tills, as well as cash and rent deposits which will be settled at completion.

The transaction will take place in two parts, starting with a payment of £3.33m on completion followed by a second tranche of up to £1.33m. The second payment will be payable up to two years after the initial transaction.

Domino’s decided to venture into the Swiss market to expand the popular pizza firm on the continent.

The company intends to build on Switzerland’s existing 12 corporate stores in Zurich, Geneva and other towns and cities to a further 25 stores across the country.

Domino’s said they hoped to potentially house up to 65 stores in the new market which is already strong, after Domino’s Switzerland generated annual sales of £8m in 2011.

A stable economy and a city-centric population attracted the organisation to Switzerland, where they hope to capitalize on the country’s strong online market through internet sales.

Further plans to move the brand further into Austria have also been suggested as a proposed option which will expire at the end of 2014.

Increased marketing and investments in Switzerland remain the priority however, and Domino’s expect a short term loss of £0.5m while they refurbish or relocate existing stores. Returns from the Swiss business are expected by 2014.

Lance Batchelor, Chief Executive Officer, commented: “Switzerland represents a good opportunity to continue our expansion into Europe by acquiring an existing business with a basic infrastructure and some existing stores with good potential in a very affluent consumer market.

The Swiss team will be headed by Brian Trier, who has previous senior managerial experience with the company in Europe, the Middle East and Africa.

A team solely dedicated to the Swiss market will allow UK, Irish and German managerial staff to focus on existing markets, while drawing on the expertise of the company to strengthen the team in Switzerland.

Domino’s currently have a network of over 9,800 stores worldwide in 73 global markets, with nearly 750 locations in the UK.

This was posted in Bdaily's Members' News section by Miranda Dobson .