Jollibee to close deal with Taiwanese chain

MANILA, Philippines - Fastfood restaurant chain Jollibee Foods Corp. on Tuesday said it would finalize a deal to acquire a 70% stake in the Lao Dong group of Taiwan, as part of a plan to increase its growing portfolio of restaurant chains offering Chinese cuisine. Its wholly owned unit Jollibee Worldwide Pte. Ltd. will pay P63.1 million ($1.3 million) next month to the owners and will invest another P31.6 million in the joint venture, the listed mother firm told the stock exchange Tuesday. Lao Dong’s present owners will also invest T$9 million in the business. "The joint venture was entered into to pursue the operation and further expansion of the Lao Dong business in Taiwan and the introduction of the business to... China," Jollibee said. Lao Dong, which has eight stores and a commissary in Taipei, has annual sales of T$121.6 million. Jollibee already runs 167 restaurants in China under the Yonghe King, Hong Zhuang Yuan and Chun Shui Tang brands. In a disclosure Tuesday, Jollibee said it hopes to close the deal next month. In September, the fastfood chain announced a plan to borrow $100 million from several banks to fund its investments in China, the first domestic borrowing by the group in seven years. To date, Jollibee has acquired five Chinese stores to gain a foothold in the huge consumer market. Aside from Lao Dong, Jollibee has also completed the purchase of Beijing-based congee restaurant Hong Zhuang Yuan. It has also bought Chinese fastfood chain Yonghe King last 2004 and acquired Chun Shui Tang tea house in 2006. In July, the company entered into a joint venture deal with US-based Chow Fun Holdings LLC, where Jollibee will have a 12% stake in the US-based Asian restaurant for $950,000. In the Philippines, Jollibee operates its flagship hamburger and chicken chain with the same name; pasta and pizza store Greenwich; Chinese fastfood chain Chowking; the Red Ribbon bakery; and Delifrance. As of October, the group had 1,491 stores locally and 233 stores spread across Hong Kong, China, Vietnam, Dubai, Indonesia and the US. Net profits of the fastfood giant dropped by almost a tenth to P513 million in the third quarter as customers spent less due to rising consumer prices. Jollibee shares Tuesday climbed by 8.57% or P3 to close at P38 apiece. — Kristine Jane R. Liu, BusinessWorld