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IRB owns 14 Pizza Hut restaurants in São Paulo and four café stores with the brand “In Boca al Lupo” also acquired by Brazil Fast Food. IRB recorded annual revenue of around R$ 50.0 million, EBITDA of R$ 3.65 million and net profit of R$ 1.14 million in 2007. This transaction is expected to increase Brazil Fast Food consolidated revenue by 20 percent in 2008 and 40 to 50 percent in 2009 relative to 2007.
Brasil Fast Food will retain a 60 percent stake with the remaining 40 percent to be owned by POGO Participações, a company controlled by Jorge Aguirre who has been for many years the CEO of IRB. Mr. Aguirre will remain in charge of IRB and has as a partner in POGO a Brazilian financial company, Rosenberg & Partners.
“This transaction is an important milestone in the execution of our strategy to become a leading multi-brand fast food chain in Brazil. In addition to being a good fit with our existing brands, it positions the company well to take advantage of the casual dining opportunity targeting more affluent segments of the population,” says Ricardo Bomeny, CEO of Brazil Fast Food. “We are also very pleased to welcome Jorge Aguirre to our team. Mr. Aguirre has been responsible for the excellent performance of the Pizza Hut franchise in Brazil in recent years, and we are glad that with his proven experience and leadership skills he will continue to make a valuable contribution to the success of our business.”
KPMG conducted due diligence that identified the need to write-off R$ 4.6 million in assets to shareholder equity but which will not impact Brazil Fast Food consolidated results for 2008. The transaction was closed yesterday but the closing balance sheets were established as of July 31, 2008.