July 26, 2019 / 1:09 PM / in 4 months

UPDATE 1-Brazil's IMC merges with Pizza Hut, KFC master franchiser in Brazil

(Adds IMC valuation, background)

By Carolina Mandl

SAO PAULO, July 26 (Reuters) - Brazilian restaurant operator International Meal Company Alimentacao SA has reached an agreement to merge with the master franchiser of Pizza Hut and KFC in Brazil as the companies seek cost savings in logistics and procurement.

According to a securities filing on Friday, the Martins Family, which controls the master franchiser MultiQSR, will receive some 29.3 million common shares issued by IMC and hold a 15% stake in that company.

MultiQSR operates 187 units of Pizza Hut and 62 units of KFC in Brazil as proprietary and sub-franchised restaurants.

The combined company would have had estimated total revenues of 2.3 billion reais ($607 million) in 2018, considering franchisees’ revenues and sales from roughly 460 stores.

IMC, in which private equity firm Advent International Corp has a 10% stake, was valued in the deal at 1.3 billion reais, or 8 reais per share.

Shares in IMC surged 36% this year and were trading at 8.75 reais on Thursday.

Besides MultiQSR, the Martins family is also the master franchiser of Taco Bells in Brazil and runs a number of business in retail, payments and sporting goods.

The deal has yet to be approved by shareholders and antitrust agency Cade in Brazil. ($1 = 3.7895 reais) (Reporting by Carolina Mandl Editing by Nick Zieminski and Jonathan Oatis)

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