NexCen Brands acquires Great American Cookie Co.

Jennifer Schonberger | Jan 30, 2008 1:11pm EST | Comment

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Global brand management company NexCen Brands, Inc. (Nasdaq: NEXC) said after Tuesday’s close that it has acquired the Great American Cookie Company from Mrs. Fields Famous Brands for $93.7 million and upwardly revised its earnings guidance due to the acquisition.

NexCen said it expects this transaction to be accretive beginning in 2008 and that forward 12-month revenues and operating income are expected to be $27 million and $14 million, respectively. Revenues and operating income for the Great American Cookie Company were approximately $26 million and $13 million, respectively for the 12 months ended Dec. 31, 2007.

“Factoring in financing and deal costs, this transaction should add approximately $0.10 to EPS on an annualized basis,” Lazard Capital Markets analyst Todd Slater wrote in a research note today. Slater projects that Great American Cookie will add approximately $25 million to revenue and roughly $13 million to earnings before interest and taxes in 2008.

On account of the acquisition, the New York-based company said it now expects 2008 EPS to range from $0.27 to $0.30. Previously, the firm was expecting full-year EPS of $0.19 to $0.21 per share, assuming no additional acquisitions. The consensus of three analysts polled by Thomson Financial is for earnings of $0.21 per share for the full year.

“We believe the consensus 2008 EPS estimate is too low and will continue to rise
(approaching our Street-high estimate of $0.43) as NexCen continues to add properties to its portfolio over the course of the year,” wrote Slater. The analyst has a “buy” rating on the stock with a target price of $18 per share.

The Great American Cookie brand is in addition to the four brands in NexCen's quick service restaurant portfolio, which include the hand-mixed ice cream chains MaggieMoo's and Marble Slab Creamery, as well as the hand-rolled pretzel chains Pretzel Time and Pretzelmaker.

Additionally, the Great American Cookies acquisition is the ninth brand added to NexCen Brands portfolio and increases its franchise locations from 1,600 to 1,900 locations worldwide.

The Great American Cookie Company provides cookies, cupcakes, brownies, and smoothies and is the number one mall-based cookie system in the United States. As of Dec. 31, 2007, Great American Cookies had nearly 300 franchised units primarily located in the continental United States.

Shares of NexCen (NEXC) slid 12.8%, or $0.59, to $4.09 midday. Shares of NexCen have been trading in the range of $3.52 to $13.18 for the past 52 weeks.