Jollibee completes US hamburger chain buy-in for $99 million

(Updated 12:44 p.m.) Jollibee Foods Corp. (JFC), through wholly-owned subsidiary Bee Good! Inc., on Tuesday said it has completed the acquisition of a 40-percent stake in the operator of US-based Smashburger Master LLC.

 

“JFC’s wholly-owned subsidiary, Bee Good! Inc., has completed its acquisition from Smashburger Master LLC of 40 percent of the outstanding units of SJBF LLC, the parent company of the entities comprising the Smashburger entities,” Jollibee told the Philippine Stock Exchange.

 

SJBF LLC owns, operates, and franchises the Smashburger trade name in the United States.

 

Under the acquisition, Bee Good! acquired 40 Class A units or 40 percent of the outstanding membership interests in SJBF. The acquisition was priced at $99 million.

 

“Jollibee Foods Corp. has funded the acquisition of its 40 percent stake in Smashburger with its cash reserves and with a 10-year loan from Metropolitan Bank and Trust Company,” the company said.

 

The purchase price is based on a $35-million enterprise value and $248-million equity value of SJBF, Jollibee said in an earlier filing.

The agreement gives Bee Good! a mechanism to purchase an additional 35 percent of SJBF LLC between 2018 and 2021 and the remaining balance of 25 percent between 2019 and 2026 with the purchase price based on the US company’s financial performance.

 

Smashburger is a Denver, Colorado-based company which currently has 339 restaurants in 35 states and seven foreign markets. Its system-wide sales are estimated to reach $339 million this year, equivalent to 12 percent of Jollibee’s worldwide sales.

 

“Smashburger’s system wide sales have been growing at an annual rate of approximately 30 percent between 2011 and 2015 while its store network has been increasing annually by approximately 20 percent,” Jollibee said.

 

Aside from the 2,393 outlets in the Philippines, Jollibee owns and operates 87 restaurants in the US, primarily serving Filipino customers. These are 32 Jollibee outlets, 33 Red Ribbon stores, 19 Chowking restaurants, and three Jinja stores.

 

“System wide sales in the US presently account for 5 percent of JFC’s worldwide system wide sales,” the company said. – VS, GMA News