Restaurant franchiser Spur Corporation will soon be clutching more than R360m in net cash  – equal to more than R4 a share – after confirming an empowerment deal yesterday with Grand Parade Investments (GPI).

There has been speculation in recent months of a tie-up between the two Cape Town-based companies, fuelled by GPI’s recent restructuring of its traditional gaming investments and a promising foray into fast foods via the Burger King Brand.

The deal sees GPI acquiring a 10% stake in Spur for R295m, paying R27.16 per share.  GPI is already in the money with Spur closing at R31.50 on the JSE yesterday.

The funding mechanism involves preference share funding of R72m from Spur – but still sees a substantial net cash inflow of R222m.

The deal is intriguing because Spur is not short of capital, despite conspicuously lacking an empowerment partner for a dozen years.  At the end of December last year, Spur had R138m of cash in hand – a position that will shift to more than R430m when GPI’s funds roll in.

Vunani Securities analyst Anthony Clark said it was unlikely that Spur would sit on its cash for an extended period.  “Spur has looked at a couple of acquistions that did not work out, but there is still scope to push further into the fast-food market to complement their captain Dorego’s brand.”

Mr Clark also believed a closer working arrangement between Spur and GPI’s Burger King was inevitable.

Speaking to Business Day, spur CEO Pierre van Tonder conceded there were a few acquisition opportunities on the company’s plate, but said Spur also had to fund the vertical integration of its manufacturing facilities.

Mr van Tonder, though, played down suggestions that Spur and GPI – which already has 18 Burger King outlets up and running – might strengthen their relationship, with Spur taking a reciprocal stake in GPI or Burger King directly.

“Such speculation might be a bit premature – GPI currently has existing  arrangement and obligations with Burger King in the US.”

GPI CEO, Alan Keet conceded that closer cooperation between Spur and Burger King had come up during talks.  “Obviously we’ve spoken about it, and there are probably synergies that are possible down the line.”

He said supply chain synergies would be explored first.  This would feed into recent manufacturing investments made by GPI (Mac Brothers Catering Equipment and Spur (30% of meat processor Bravis Fine Foods).