Yum! Brands Undertakes to Acquire Dragontail Systems, an Innovator in Kitchen Order Management and Delivery Technology

Rhea-AI Summary

Yum! Brands has entered into a binding agreement to acquire Dragontail Systems for A$93.5 million. This acquisition aims to integrate Dragontail’s AI kitchen order management technology into Yum’s operations, enhancing delivery capabilities, particularly at Pizza Hut. Dragontail’s platform is already utilized in nearly 1,500 Pizza Hut locations across 10 countries. The acquisition, intended to close by Q3 2021, is expected to have an immaterial impact on Yum's 2021 financial results, pending regulatory approvals.

Positive

• Acquisition of Dragontail boosts AI delivery technology at Pizza Hut.
• Existing deployment at 1,500 Pizza Hut locations enhances scalability.
• Third technology acquisition in 2021 may strengthen Yum's market position.

Negative

• Acquisition dependent on regulatory approvals could delay completion.
• Integration challenges may arise, potentially impacting operations.

Yum! Brands, Inc. (NYSE: YUM) (Yum! Brands) and Dragontail Systems Limited (ASX: DTS) (Dragontail), an innovative provider of technology solutions for the food industry, announced today that they have entered into a binding agreement under which Yum! Brands would acquire Dragontail by way of a share scheme of arrangement in accordance with Australian corporations law (referred to as the Scheme).

If the Scheme is successfully implemented, the addition of Dragontail to Yum! Brands’ growing technology portfolio is intended to give Yum! Brands the ability to scale Dragontail’s artificial intelligence (AI) kitchen order management and delivery technology globally.

Australia-based Dragontail’s platform is focused on optimizing and managing the entire food preparation process from order through delivery. Its AI-based solution automates the kitchen flow combined with the process of dispatching drivers. The technology can also operate with outside food delivery partners. In addition, Dragontail’s platform offers consumer-facing capabilities that enable customers to track their order.

“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,” said Chris Turner, Chief Financial Officer, Yum! Brands.

Dragontail's Managing Director, Ido Levanon, commented, “Yum! Brands and Dragontail have been working in a fruitful collaboration for years. 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.”

Dragontail’s platform is currently deployed across nearly 1,500 Pizza Hut restaurants in over 10 countries. If the Scheme is successfully implemented, Yum! Brands intends to scale and offer Dragontail’s platform to its brands around the world over time.

In addition to its kitchen order management and delivery technology, Yum! Brands’ purchase of Dragontail would also bring in house other Dragontail emerging technologies.

Completion of the acquisition of Dragontail under the transaction documents will mark Yum! Brands’ third technology acquisition in 2021. In March, Yum! Brands acquired the business of Kvantum, Inc., an AI-based consumer insights and marketing performance analytics company with a proven track record of adding significant value in enabling data-driven decisions to drive return on advertising dollars and increase sales. That same month, Yum! Brands also acquired Tictuk Technologies, a leading omnichannel ordering and marketing platform company offering more ways for consumers globally to access and order KFC, Pizza Hut, Taco Bell and The Habit Burger Grill through text, social media and other conversational channels.

Under terms of the transaction documents, Yum! Brands has agreed to pay A$93.5 million in cash for all of the issued share capital in Dragontail (on a fully diluted basis). The proposed acquisition of Dragontail by Yum! Brands, which is to be implemented by way of an Australian share scheme of arrangement in accordance with the transaction documents and Australian corporate law, is conditional on, amongst other matters, Australian Federal Court approval and approval by Dragontail shareholders and certain other regulatory waivers and rulings. Accordingly, based on the indicative transaction timetable (which is indicative only and subject to change) and assuming all requisite transaction conditions have been satisfied or waived, Yum! Brands expects the acquisition of Dragontail to close by the end of the third quarter of 2021.

Yum! Brands estimates that this all-cash acquisition will have an immaterial impact to its 2021 financial results.

About Yum! Brands

Yum! Brands, Inc., based in Louisville, Kentucky, has over 50,000 restaurants in more than 150 countries and territories, making it a leader in global retail development primarily operating the company’s brands – KFC, Pizza Hut and Taco Bell – global leaders of the chicken, pizza and Mexican-style food categories. The Company’s family of brands also includes The Habit Burger Grill, a fast-casual restaurant concept specializing in made-to-order chargrilled burgers, sandwiches and more. Yum! Brands was included on the 2021 Bloomberg Gender-Equality Index. In 2020, Yum! Brands was named to the Dow Jones Sustainability Index North America and was ranked among the top 100 Best Corporate Citizens by 3BL Media.

About Dragontail

Dragontail is revolutionizing the Quick Service Restaurant (QSR) and foodservice industry with its Algo Platform, which uses a sophisticated algorithm to optimize and manage the entire food preparation process from order to delivery. The Algo Platform fully automates and streamlines the kitchen flow with a view to delivering immediate and significant returns on investment to fast food and quick service restaurants.

Cautionary Statement Regarding Forward-Looking Statements

Certain statements in this communication contain “forward-looking statements.” Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements are based on current expectations, estimates, assumptions or projections concerning future results or events, including, without limitation, the projected closing of the transaction, the anticipated benefits of the transaction, and the anticipated impact of the transaction on Yum! Brands’ 2021 results. Forward-looking statements are neither predictions nor guarantees of future events, circumstances or performance and are inherently subject to known and unknown risks, uncertainties and assumptions that could cause actual results to differ materially from those indicated by those statements. We cannot assure you that any of the expectations, estimates or projections expressed herein will be achieved. Numerous factors related to the transaction could cause actual results and events to differ materially from those expressed or implied by forward-looking statements, including, without limitation: the risk that the proposed transaction may not be completed in a timely manner or at all, the failure to satisfy any of the conditions to the consummation of the proposed transaction, including the approval of the transaction by regulatory authorities, the Court or Dragontail’s shareholders; the occurrence of any event, change or other circumstance that could give rise to the termination of the definitive agreement between the parties; the effect of the announcement or pendency of the proposed transaction on Yum!’s and Dragontail’s business relationships, operating results and business generally; the risk that the proposed transaction may disrupt current plans and operations and the potential difficulties in employee retention as a result of the proposed transaction; the ability to achieve the synergies and value creation contemplated; Yum!’s ability to promptly and effectively integrate Dragontail’s businesses; the risk that operating costs and business disruption (including, without limitation, difficulties in maintaining relationships with employees) may be greater than expected; the assumption of unexpected risks and liabilities; the diversion of and attention of management of both Yum! and Dragontail on transaction-related issues; and the other factors discussed in “Risk Factors” in Yum!’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020 and subsequent filings with the SEC made by Yum!, which are available at http://www.sec.gov. Yum! assumes no obligation to update the information in the communication, except as otherwise required by law. Accordingly, you should not place undue reliance on these forward-looking statements.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210526006170/en/

FAQ

What is the purpose of Yum's acquisition of Dragontail?

The acquisition aims to integrate Dragontail’s AI kitchen order management technology into Yum’s operations to enhance delivery capabilities.

What is the value of the Yum! Brands and Dragontail acquisition?

Yum! Brands has agreed to pay A$93.5 million for the acquisition of Dragontail.

When is Yum! Brands expected to complete the acquisition of Dragontail?

The acquisition is expected to close by the end of the third quarter of 2021, subject to regulatory approvals.

How will Dragontail's technology impact Yum! Brands?

Dragontail’s technology is expected to enhance Yum! Brands' delivery capabilities and improve food preparation processes.

What are the expected benefits of the acquisition for Yum! Brands?

The acquisition is anticipated to provide Yum! Brands with innovative technology and improve operational efficiency.