Western Australian boutique brewing company Empire Beer Group Ltd has snapped up East Perth's Royal Bar and Brasserie for $3.5 million.
Western Australian boutique brewing company Empire Beer Group Ltd has snapped up East Perth's Royal Bar and Brasserie for $3.5 million.
Empire will develop the venue into a Colonial Brewing Co pub and restaurant, similar to the one it owns in Margaret River.
The move is a departure from plans outlined in its prospectus to develop a second pub in Fremantle, where Little Creatures and the yet-to-open Mad Monk boutique brewery are based.
WA Business News revealed a fortnight ago that Empire, which listed on the Australian stock exchange in January, had abandoned talks with restaurateur Warren Mead to develop a Colonial Brewing pub at the Oyster Bar in North Fremantle and was assessing a site in Perth.
Empire managing director Phil Gallagher said the brewer was in advanced negotiations with experienced hotel operators to manage the East Perth site and it was continuing to assess new development opportunities.
"Investigations continue on a number of metropolitan and regional opportunities in Western Australia and interstate," Mr Gallagher said.
He said the company's "two phase" growth strategy involved developing new Colonial micro-brewery's throughout Australia, and purchasing a portfolio of stand-alone food and beverage focused hotels suitable for the distribution and sale of Colonial beer.
Empire said the purchase of the Royal Bar and Brasserie would be partially funded by debt, and the hotel would be immediately cash flow positive.
Empire shares closed 1.5 cents higher at 21.5 cents.
The full text of company announcement is pasted below
WA based craft beer company Empire Beer Group Ltd ("Empire" or "the Company") has strengthened its distribution and brand presence in metropolitan Perth through the acquisition of the "The Royal Bar and Brasserie" in East Perth.
This transaction is valued at A$3.5m and is subject to the following conditions
- Completion of 30 day due diligence process
- Approval of the transfer of the liquor licence to Empire by the Western Australian Director of Liquor Licensing
- Approval of finance
Empire Managing Director Phil Gallagher said this was a strategic acquisition that represented the implementation of a dual growth strategy and a significant milestone in the development of Empire.
"Importantly, the venue represents an acquisition that is immediately cash flow positive, and the company has the balance sheet to support the acquisition, so capital raising is not required. It is intended that debt will be used to partially fund the acquisition." Mr Gallagher said.
The two phases of the growth strategy will grow profit and develop the Colonial brand by
- Development of new 'Colonial Brewing' micro-brewery venues throughout Australia
- Acquisition of a portfolio of profitable stand-alone food and beverage focussed hotels suitable for the distribution and sale of Colonial Brewing Co Craft Beer brands.
Mr Gallagher said Empire had reviewed a number of sites before, but this one stood out in terms of offering exactly what the company was looking for.
"The acquisition of a profitable stand-alone hotel will allow Empire the opportunity to focus on on-premise sales, maximise its expertise, grow brand presence, and provides a platform for future growth," he said.
"The Royal Bar and Brasserie is a high profile, high-traffic tourist location and a leading Perth food and beverage venue, with significant potential for growth in both the local and tourism markets. It will provide the company with significant distribution and volume for its flagship Colonial Brewing Co brands."
Empire is in advanced negotiations with experienced hotel operators in regard to the management of the site.
"Investigations continue on a number of metropolitan and regional opportunities in Western Australia and interstate," Mr Gallagher said.
