Industry News | January 25, 2010

Investment Firm Acquires Japanese Domino's

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Bain Capital, a global private investment firm, announced the signing of a definitive agreement to acquire Higa Industries Co. Ltd., the long-time master franchisee of Domino's Pizza in Japan. Bain Capital will acquire Higa Industries from its three current shareholders: Duskin Co. Ltd., Daiwa SMBC Capital, and Ernest M. Higa, the company's founder and CEO. Financial terms of the private transaction were not disclosed.

Domino's Pizza has been operating in Japan for 25 years under an exclusive master franchise agreement between Higa Industries and Domino's Pizza International Inc., a wholly owned subsidiary of Domino's Pizza LLC. Higa Industries operates 179 franchised Domino's Pizza stores in Japan. Domino's Pizza was the first pizza delivery chain in Japan.

"Under the franchise agreement with Higa Industries, Domino's Pizza has built a strong competitive position in the pizza delivery industry in Japan by leveraging its distinctive product, high-quality service, and unique online marketing strategies," says David Gross-Loh, a managing director at Bain Capital in Tokyo. "The strength of this position is evident when you consider that despite a tough environment for the restaurant industry, the company has achieved steady growth in both sales and profit in Japan over the last three years."

"We look forward to working with the Higa Industries team to support the continued growth of Domino's Pizza in Japan and further strengthen its competitive edge," says Yuji Sugimoto, a managing director at Bain Capital. "We believe there are significant opportunities for store growth, operational improvement, and attractive new product introductions, all of which can be aided by our knowledge of Domino's Pizza and the resources of its global operations network."

Bain Capital has had a long and successful history with Domino's Pizza. The firm acquired a majority stake in Domino's Pizza in a private transaction in 1998. Domino's Pizza Inc. became a public company in 2004, and Bain Capital retains a significant minority stake in the company.

Bain Capital established offices in Tokyo in 2006, and has a team of 20 investment and operations professionals in Japan to pursue investment opportunities and work with its portfolio companies. The firm has a strong track record of partnering with management teams and employees to build significant value. Bain Capital has made investments in a variety of leading companies with principal or significant operations in Japan, including BELLSYSTEM 24, MEI Conlux, Sun Telephone, D&M Holdings, Toys "R" Us, and Burger King. The firm's experience in the quick-service and foodservice industries includes current investments in Dunkin' Brands (Dunkin' Donuts and other brands), and OSI Restaurant Partners (Outback Steak House and other brands).

The transaction is expected to close in early February. Bain Capital has received committed financing for the deal from the Bank of Tokyo Mitsubishi UFJ.
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