What did Magellan announce this morning?
The listed investment company (LIC) announced that it is wading into the global fast food industry. Magellan has entered into an agreement to acquire a 10% stake in Guzman y Gomez (Holdings) Limited (GYG).
GYG is a well-known, Australian-based quick service restaurant chain with a focus on Mexican cuisine. The group currently has 147 restaurants spanning Australia, Singapore, Japan and the United States.
The 10% shareholding is set to cost Magellan $86.8 million in cash, with completion conditional on GYG shareholder approval in late January 2021. The announcement makes the Magellan share price worth watching in early trade on Tuesday.
The acquisition will fall under Magellan’s Principal Investments business. Magellan will hold a non-executive director position but have no active day-to-day role in GYG.
Magellan Chairman Hamish Douglass said the investment company is “extremely pleased” to be come a GYG shareholder. The group will look to leverage its “deep investment experience” in the quick service restaurant industry as a major investor and supportive shareholder.
How has the Magellan share price performed this year?
There’s no doubt the coronavirus pandemic and subsequent response has wreaked havoc on markets this year. The S&P/ASX 200 Index (ASX: XJO) has edged 0.3% lower to 6,669.9 points this year while the Magellan share price has also struggled.
Shares in the Aussie LIC are down 4.4% since the start of January to $55.18 per share. Magellan currently has a market capitalisation of $10.1 billion and is trading near the middle of its 52-week range.
Magellan shares are yielding 3.9% per annum right now with a price-to-earnings (P/E) ratio of 25.3.
It will be interesting to see how the the Magellan share price performs today as investors digest news of the group’s latest acquisition.
Where to invest $1,000 right now
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.
*Returns as of February 15th 2021
Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.