Magellan Financial Group agrees to sell stake in Guzman y Gomez
The transaction is expected to be completed in two tranches in June and July, generating an estimated pre-tax profit on the sale of $34 million in FY22.
Magellan Financial Group announced it has agreed to sell its 11.6% stake in Guzman y Gomez for $140 million, roughly a year and four months after investing in the fast food business.
In an announcement sent to the ASX, the company said it offloaded the shares to an entity of Barrenjoey Capital Partners, in which Magellan has a 40 per cent stake, made with the intention of seeding an investment trust comprising high net worth investors.
Magellan may also be entitled to a further payment of up to $6 million, subject to GYG’s performance and the realisation of the investment by the trust.
"GYG is an outstanding company, however, the sale of our shareholding is consistent with our strategy to focus on our core funds management business," Magellan chairman Hamish McLennan said in the update. "The upfront sale price represents a 36.3 per cent premium to our entry price in January 2021. We believe the sale is an excellent outcome for Magellan shareholders.”
The sale is also subject to the completion of a pre-emptive rights process under the GYG shareholders' deeds, giving them the right to purchase Magellan's shares on the same terms. The transaction is expected to be completed in two tranches in June and July, generating an estimated pre-tax profit on the sale of $34 million in FY22.
Proceeds will be used to support Magellan’s ongoing capital management initiatives, the announcement added.
“GYG continues to go from strength to strength and we are pleased that Magellan have been able to get a strong return on their investment for their shareholders,” Guzman y Gomez founder and CEO Steven Marks said in a separate statement.