Caffe Nero is buying three quarters of the Aroma Cafe chain of coffee shops from its owner, McDonald's.
The purchase of 26 of the 37 Aroma outlets is under negotation and will lift the company from number four in the coffee bar market to number three, with 107 outlets, ahead of Coffee Republic but still less than half the size of Whitbread's Costa or Starbucks.
The deal, which includes no liabilities,
is expected to be completed by March. The sale price has not been disclosed, but Nero says the acquisition price plus conversion costs would be less than the price of a new store fit-out, which is around £200,000 a site.
Nero this morning
annonced half year sales up 68% at £11.3m, with store profit up 75% at £1.9m. Pre-tax loss fell £108,000 to £780,000. Ebitda was £324,000. Like for like sales were ahead 2.5%.
Nero boss Gerry Ford said he still saw Stabucks as the main competititor for sites, although the US giant was being more careful about the rents it would pay. Both chains had gained UK market share, he said.
McDonald's confirmed last August it was selling Aroma, which has seen no new openings for two years. At the time observers said the chain was likely to fetch in excess of £15m. The current price is expected to be a fraction of that.
The burger giant paid £10m for Aroma in 1999. It said at the time the brand had "great potential" and would be expanded in "what is an exciting market".
The chain subsequently grew from 23 outlets to 37, with two Aromas opening in Switzerland and four in Argentina. However, it is believed that the brand has failed to live up to expectations. The decision to sell came after McDonald's 33% investment in the Pret a Manger sandwich chain a year ago.
In September Caffe Nero's chairman and chief executive, Gerry Ford, first linked himself with a possible purchase of the chain when he said some of the Aroma outlets might be of interest "as a property play". A purchase of Aroma would give Caffe Nero up to 60 outlets in London.
The Aroma saga is likely to end up costing McDonald's shareholders millions of dollars. In its latest accounts, released last week, McDonald's said it was putting aside $45m (£32m) of pre-tax charges to cover the anticipated disposition of Aroma and the costs of the fraud that hit its Monopoly game promotion in the United States.
The purchase of 26 of the 37 Aroma outlets is under negotation and will lift the company from number four in the coffee bar market to number three, with 107 outlets, ahead of Coffee Republic but still less than half the size of Whitbread's Costa or Starbucks.
The deal, which includes no liabilities,
is expected to be completed by March. The sale price has not been disclosed, but Nero says the acquisition price plus conversion costs would be less than the price of a new store fit-out, which is around £200,000 a site.
Nero this morning
annonced half year sales up 68% at £11.3m, with store profit up 75% at £1.9m. Pre-tax loss fell £108,000 to £780,000. Ebitda was £324,000. Like for like sales were ahead 2.5%.
Nero boss Gerry Ford said he still saw Stabucks as the main competititor for sites, although the US giant was being more careful about the rents it would pay. Both chains had gained UK market share, he said.
McDonald's confirmed last August it was selling Aroma, which has seen no new openings for two years. At the time observers said the chain was likely to fetch in excess of £15m. The current price is expected to be a fraction of that.
The burger giant paid £10m for Aroma in 1999. It said at the time the brand had "great potential" and would be expanded in "what is an exciting market".
The chain subsequently grew from 23 outlets to 37, with two Aromas opening in Switzerland and four in Argentina. However, it is believed that the brand has failed to live up to expectations. The decision to sell came after McDonald's 33% investment in the Pret a Manger sandwich chain a year ago.
In September Caffe Nero's chairman and chief executive, Gerry Ford, first linked himself with a possible purchase of the chain when he said some of the Aroma outlets might be of interest "as a property play". A purchase of Aroma would give Caffe Nero up to 60 outlets in London.
The Aroma saga is likely to end up costing McDonald's shareholders millions of dollars. In its latest accounts, released last week, McDonald's said it was putting aside $45m (£32m) of pre-tax charges to cover the anticipated disposition of Aroma and the costs of the fraud that hit its Monopoly game promotion in the United States.
