NEW YORK -- New World Coffee & Bagel's acquisition of competitor Manhattan Bagel Co. has created the largest coffee/bagel franchiser in the country, with approximately 340 stores, according to officials.
The deal, worth $15.3 million, came after a federal bankruptcy court judge in New Jersey approved New World's reorganization plan for Eatontown, N.J.-based Manhattan Bagel, which had filed for Chapter 11 bankruptcy protection in November 1997. New World signed an agreement to acquire the bagel manufacturer and franchiser in July 1998.
The agreement called for the takeover of Manhattan Bagel's store franchise systems, two bagel-dough manufacturing plants and corporate operations. According to officials, the deal creates a company vertically integrated in both coffee and bagel manufacturing -- with bagel-dough plants in Eatontown, N.J., and Los Angeles, and a coffee-roasting facility in Branford, Conn. -- capable of supplying stores on both coasts.
"Closing the Manhattan Bagel acquisition is a major step forward for New World," said Ramin Kamfar, New World president and chief executive officer. "We have created the largest coffee and bagel franchiser in the United States, and will look to leverage our dual coffee and bagel strengths to grow the business aggressively."
Officials said that Manhattan Bagel would become a subsidiary of New World. Under this scenario, the companies will consolidate their corporate infrastructure but each chain will maintain its individual identity.
In addition to the $15.3 million acquisition, New World also closed a $5 million senior debt financing agreement with BET Associates, controlled by Bruce E. Toll, vice chairman and co-founder of Toll Bros. Inc. Proceeds from the financing were used by New World as partial payment of the $7.3 million in cash required at the closing of the Manhattan Bagel acquisition. Toll now reserves the right to appoint a member to New World's board of directors.
"We are pleased that Mr. Toll is joining us," continued Kamfar. "[His] stature and experience will provide valuable guidance as New World continues to grow and consolidate its position in the coffee and bagel business."
Kamfar said that the deal will result in systemwide revenues approaching $150 million and company revenues exceeding $45 million.