SÃO PAULO - Brazilian restaurant franchise operator International Meal Company (IMC) announced on Wednesday that it has entered into a binding agreement with Kentucky Foods Chile Limitada to establish a joint venture overseeing its KFC restaurant operations in Brazil.

Under the terms of the deal, IMC will divest a 58.3% stake in its Brazilian KFC business to the Chilean group for a total of $35 million, according to a securities filing by IMC.

IMC stated that the proceeds from this transaction will be strategically allocated to reducing the company's existing debt. Furthermore, the company highlighted that this agreement paves the way for an accelerated expansion of the KFC brand across Brazil without requiring direct capital investments from IMC itself.

Currently, IMC operates approximately 230 KFC restaurants throughout Brazil. In addition to KFC, IMC's portfolio in the Latin American nation includes other well-known brands such as Pizza Hut.

A significant aspect of the agreement is the granting of exclusive rights to the newly formed joint venture to operate the KFC brand nationwide in Brazil. While IMC previously owned and operated all KFC outlets in the country, it did not possess the exclusive nationwide licensing rights for the brand.

The transaction values IMC's KFC operations in Brazil at $60 million. Notably, this valuation exceeds IMC's total market capitalization, which stands at approximately $55 million.

This strategic move signals a significant shift in the landscape of the fast-food market in Brazil and suggests a strong commitment to the growth of the KFC brand within the country through this collaborative partnership. Kentucky Foods Chile's investment underscores the potential seen in the Brazilian market for further expansion of the iconic fried chicken chain.

Key Highlights of the Deal:

Parties Involved: International Meal Company (IMC) and Kentucky Foods Chile Limitada.
Transaction: IMC sells a 58.3% stake in its KFC operations in Brazil.
Purchase Price: $35 million.
Use of Proceeds: Debt reduction for IMC.
Strategic Benefit for IMC: Enables KFC expansion without direct investment.
Current KFC Presence in Brazil: Approximately 230 restaurants operated by IMC.
Exclusive Rights: The joint venture gains exclusive rights to operate the KFC brand in Brazil.
Valuation of KFC Brazil: $60 million.
IMC's Total Market Value: Approximately $55 million.

This partnership is expected to leverage the strengths of both IMC's existing operational infrastructure and Kentucky Foods Chile's potential resources and strategic vision for the KFC brand. The move is anticipated to bring about a new phase of growth and development for KFC in the Brazilian market.