‘Completely off base’: Domino’s boss Jack Cowin talks down takeover speculation

Domino’s executive chairman Jack Cowin has dismissed a report about a potential takeover of the Australian pizza chain by US private equity giant Bain Capital as “pure speculation”.

The $1.7 billion fast food company’s share price skyrocketed by as much as 23 per cent on Tuesday morning, and was up 17.4 per cent when it was halted from trade at 11.22am AEDT. The Australian Financial Review’s Street Talk column had reported that Bain was looking at a deal to acquire part or all of ASX-listed Domino’s business, citing unidentified people briefed on the matter.

“There has been no conversation, no contact, no nothing with Bain, so that’s pure speculation,” Cowin told this masthead in a phone interview.

Following the company’s official dismissal of the report in response to a “speeding ticket” from the ASX, the stock pared its gains when it resumed trading in the afternoon, and was up just 2.7 per cent at $15.87 shortly after 3pm.

The Canadian-born fast food veteran, who is Domino’s biggest investor and the founder of Hungry Jack’s, acknowledged there had been plenty of private equity interest in buying shares, but claimed there was “zero” truth to the AFR article.

“The reality is the share price has been undervalued, oversold, and there’s lots of people who have been looking around,” he said.

“Private equity are looking to buy shares at an advantageous price. The shares in Domino’s have been attractive at this level.”

The pizza business, which boomed during COVID lockdowns, has been struggling over the past three years as overly ambitious global expansion plans in Europe and Asia failed to bear fruit. Since the beginning of the year, its share price has almost halved and was languishing at $15.45 before Tuesday’s takeover boost, having reached a peak of more than $160 in September 2021.

Leadership instability exacerbated the company’s flailing performance: long-serving global chief executive Don Meij was replaced by former Coca-Cola executive Mark van Dyck in November last year. Van Dyck closed 200 underperforming stores as one of his first moves before departing the business after just seven months in the role.

While the company conducts another global hunt for a chief executive, Cowin has taken up the duties.

Domino’s had copped a query from the ASX seeking an explanation for the sudden share price spike on Tuesday morning, and issued a reply in the afternoon.

“Domino’s confirms that, as far as it is aware, it has not received any proposal from Bain Capital or had any communication with that organisation,” the response stated.

“It is clear that the change in price of [Domino’s shares] and the increase in volume … all occurred after that article was published.”

Bain Capital is best known for its turnaround of Virgin Australia after it rescued the airline from a COVID-induced collapse in 2020. After installing Jayne Hrdlicka as chief executive, Bain restructured the business, aggressively cut costs and 3000 jobs, and brought it back to profitability in 2023. Virgin floated on the ASX in late June after a four-year hiatus on the stock exchange.

VanEck Australia deputy head of investments Jamie Hannah said Domino’s share price had been on a “downhill slope” for years, but said an outfit like Bain – which has $US185 billion ($283 billion) in funds under management – could inject significant capital and “really turn companies around and take controlling stakes.”

“[Bain] are not passive investors. They try to buy companies and improve them operationally,” Hannah said.

“Adding anything to the performance is obviously interesting for a shareholder to try increase return.”

Cowin did not rule out exploring potential deals with major investors.

“You never know what the future might bring,” he said. “But at this stage of the game, the article this morning was completely off base.”

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