Cold Stone and Kahala merge to form holding company

SCOTTSDALE Ariz. Ice cream chain franchisor Cold Stone Creamery and multibrand fast-food franchisor Kahala Corp. are merging into a holding company in part to compete with private-equity firms for additional restaurant brand acquisitions, the heads of the Scottsdale companies were quoted as indicating late Thursday in an Associated Press report.

Under the name Kahala Cold Stone, the company's 13 brands, including Blimpie, Ranch 1, Taco Time and Great Steak & Potato Co., reportedly would generate sales of more than $1.1 billion from about 4,600 retail locations run by more than 3,000 franchisees in 15 countries. Terms of the merger were not stated.

Kahala founder and CEO Kevin Blackwell will be chairman of Kahala Cold Stone, and its CEO will be Doug Ducey, former chairman and CEO of Cold Stone Creamery, AP said. The two were quoted as indicating that they may take the new business public, and Ducey was quoted as predicting that prospective sellers of restaurant companies "would prefer to have their brand under Kahala Cold Stone" than be owned by a private-equity firm.