Jollibee buys Beijing-based congee chain
In a disclosure Tuesday, the fast food chain said it had signed a deal with Beijing-based Hong Zhuang Yuan to fully acquire the congee chain for P2.5 billion through its wholly owned subsidiary Jollibee Worldwide Pte. Ltd.
"The Hong Zhuang Yuan business is quite profitable and has no debt," Jollibee said.
The Beijing restaurant chain is estimated to have annual sales of P1.3 billion this year, and operates 37 restaurants mostly located in the Chinese capital.
Jollibee said the actual purchase and transfer of ownership would take place in October and is subject to the approval of China’s Ministry of Commerce. Under the deal, Jollibee will not pay anything until the transaction is completed.
The company first disclosed its plan to acquire Hong Zhuang Yuan in September last year. President and Chief Executive Officer Tony Tan Caktiong said the congee restaurant would be a strong addition to their presence in China in terms of market segment and geographical coverage.
Jollibee operates the largest restaurant network in the country, operating a total of 1,480 stores — 632 Jollibee branches, 381 Chowking stores, 235 Greenwich outlets, 201 Red Ribbon stores, 28 Delifrance branches and three Manong Pepe outlets.
The group also operates 209 stores and has bought a number of restaurants abroad, particularly in Taiwan and China.
Aside from Hong Zhuang Yuan, Jollibee had acquired three Chinese restaurants to gain a foothold in the huge consumer market.
It bought 70% of Taipei restaurant Lao Dong in June and Chun Shui Tang tea house in 2006. In 2004, Jollibee bought Chinese fast food chain Yonghe King for $22.5 million.
In July, the company entered into a joint- venture deal with US-based Chow Fun Holdings LLC, in which Jollibee will have a 12% stake in the US-based Asian restaurant for $950,000.
The fast food giant has been hit by rising commodity prices, posting an 18.7% drop in its net profit to P645 million in the second quarter.
Shares of the company went up by 1.26% or 50 centavos to P40 Tuesday. — Kristine Jane R. Liu, BusinessWorld