Israeli-Australian foodtech company Dragontail Systems (ASX: DTS) is being sold to US company Yum! Brands, Inc. (NYSE: YUM), owner of the KFT, Pizza Hut and Taco Bell fast food brands. Yum! Brands has a market cap of $35.9 billion.
Dragontail Systems' valuation in the deal is AU$93.5 million fully diluted, which is about NIS 236 million. In response to the report, the company's share price shot up 24.3% on the Australian Securities Exchange on a huge volume to AU$0.23, very close to the acquisition price of AU$0.235.
Dragontail Systems was founded by Udi Shamai, who set up and managed the Domino's Pizza chain in Israel and who is currently the Israeli franchisee of the Pizza Hut chain. The company is headed by Ido Levanon. It develops and sells software solutions designed to optimize the kitchen order and delivery management for fast food restaurants.
Dragontail Systems was floated in Australia in late 2016 at AU$0.20 per share. In the four-and-a-half years since then its share price has ranged between AU$0.08 and AU$0.34. It has made a number of secondary offering at prices ranging between AU$0.14 and AU$0.22.
According to Dragontail Systems' notice to the Australian Securities Exchange, the offer from Yum! Brands came when it was about to invest in extending its presence in the US. The Dragontail Systems board of directors unanimously recommends acceptance of the offer.
"Yum! Brands and Dragontail have been working in a fruitful collaboration for years," Levanon said. "Dragontail's board of directors fully supports this transaction, which it considers to be an attractive opportunity for its shareholders. It will also provide Yum! Brands with innovative technology. The activities of Dragontail and Yum! Brands are complementary, the synergy is natural and we bless the completion of the acquisition."
Yum! Brands CFO Chris Turner said, "With Dragontail, we expect to tap into the power of AI to accelerate and further enhance our delivery technology capabilities, especially at Pizza Hut, and optimize the end-to-end food preparation process."
At the end of the first quarter of this year, Dragontail Systems' installed base worldwide totaled 3,480, up from 2,663 at the end of the previous quarter. The company says that it continues to expand in the US, its main market, while entering new markets in Asia and Europe.
In an Interview with Shlomit Lan of "Globes" last year, Levanon spoke about Dragontail Systems' origins. "In 2013, when Udi saw that he lacked technological solutions for managing his chain, he approached me and asked whether I was interested in setting up a company to produce technological solutions for restaurants. I asked Udi which was the biggest customer in the world, and he said Yum!. I said, 'OK, I'll put together a video presentation.' Since there was nobody to show, it was an animation. We flew to Dallas, to the company's headquarters. They went crazy. 'When can we come to Israel to see it?' There was still nothing. We returned to Israel and quickly put together a prototype.'
Published by Globes, Israel business news - en.globes.co.il - on May 27, 2021
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