ABACO MARKETS EXPANDS

June 1999 Table of Contents

ABACO MARKETS EXPANDS

Abaco Markets Ltd announced on 15th April that the company had entered into an agreement to purchase the Caribbean Pizza Group of companies which owns the Domino's Pizza franchise in The Bahamas. Abaco Markets Secretary and Treasurer, Mr Reginald Sands, said the decision to buy the Nassau and Freeport based operation was made after careful consideration of the operational fit and synergies to be gained from a food wholesale and retailer owning a fast food delivery franchise.

This is not a new business model. Mr Sands explains: "We gave a lot of consideration as to whether this acquisition would be a good fit with the Abaco Markets group. We did some research and found that in Jamaica, Mexico and Greece, food groups owned the national Domino's franchises. These companies were able to report a good operational fit and were able to attain cost savings in areas such as food and beverage purchasing, freight and storage, insurance and administrative overhead, and also benefitted from customer loyalty built through the Domino's brand. Furthermore, we see good long term growth opportunities for the brand throughout The Bahamas and the region."

Abaco Markets did not comment on the price paid for the Caribbean Pizza Group but said that consideration was settled as a combination of cash and shares. They were pleased that brothers Chris and Terry Tsavoussis, the previous owners of the franchise, would continue to have a significant interest in Caribbean Pizza through their shareholdings in Abaco Markets.

At its Annual General Meeting in Marsh Harbour on 7th May, Craig Symonette, Chairman of Abaco Markets, announced that earlier the same day an agreement was reached with the owners of Bellevue Business Depot Ltd to merge its operations with Abaco Office Products Ltd, a subsidiary of Abaco Markets. The transaction value announced was $2.7 million, plus a performance-related payment of $200,000 dependent on Bellevue's profitability to September 1999. The final price would be settled through a combination of cash and 142,000 shares in Abaco Markets.

Bellevue is owned and operated by the Osborne family: Ronald, Jean, and their son, Robert. Ronald joined Bellevue in 1963 and purchased the company in 1964. Bellevue offers a complete range of office stationery, products and furniture from two outlets, one in Freeport and one in Marsh Harbour. The company has experienced extremely strong growth in sales over the last few years.

Abaco Office products has operated its stationery and office products outlet for several years. Mr Sands commented: "We are very pleased to complete this transaction. The first steps are to combine our operations in Abaco and to benefit from improved purchasing power. The combined annual sales of the two operations will amount to approximately $4 million."

Mr Gregory Cleare, Managing Director of KPMG Corporate Finance Ltd, who acted as financial advisor to Abaco Markets in this transaction, noted: "Once again, Abaco Markets has demonstrated its commitment to growth by undertaking this important strategic alliance. The combination of the Osbornes' management style with the business strengths of Abaco Markets will solidify the future of their office products division."

Chairman Craig Symonette said, "This transaction makes our second merger with a Freeport family-run business, following our successful merger with Thompson Wholesale earlier this year. This demonstrates our belief in the future of the Grand Bahama economy and The Bahamas as a whole."

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