Jollibee Foods to acquire Coffee Bean & Tea Leaf

Homegrown fast-food operator Jollibee Foods Corp. is about to have a bigger bite in the international market, as it set to spend as much as $350 million to acquire The Coffee Bean & Tea Leaf brand.

In a regulatory filing submitted by JFC vice president Valerie Amante, the company said it will invest in a new Singapore-based holding company through its wholly-owned subsidiary Jollibee Worldwide Pte Ltd (JWPL).

"The acquisition of The Coffee Bean & Tea Leaf® brand will be JFC’s largest and most multinational so far with business presence in 27 countries," Tony Tan Caktiong, JFC chairman, said in the disclosure.

Owned by Los Angeles-based International Coffee & Tea LLC, The Coffee Bean & Tea Leaf ended 2018 with a total of 1,198 outlets -- 336 company-owned, and 853 franchised.

Broken down, there are 284 in the United States; 447 in Southeast Asia (139 in the Philippines, 101 in Indonesia, 99 in Malaysia, and 61 in Singapore); 336 in the rest of Asia; and 122 in other regions.

The Coffee Bean ended 2018 with total revenues of $313 million, and a total earnings before income tax, depreciation, and amortization (EBITDA) of $23.7 million.

"This will add 14% to its (JFC's) global system-wide sales, 26% to its total store network, will bring international business’ contribution to 36% of worldwide sales and will bring JFC closer to its vision to be one of the top 5 restaurant companies in the world in terms of market capitalization," said Caktiong.

According to the disclosure, the total consideration for the acquisition is $350 million -- $100 million will represent 80% of the new holding company and $250 million as advances to the holding company.

"This holding company plans to issue within six to nine months preferred shares (on terms to be determined) for an aggregate consideration of at least $250 million, which will be used to repay JFC's advances," it said.

Java Ventures LLC, a wholly-owned subsidiary of JWPL, will be the acquiring entity but will eventually be a wholly-owned subsidiary of the new holding company. 

JFC operates in 21 countries, with over 4,500 stores globally. Its brands include Jollibee, Chowking, Greenwich, Red Ribbon, Mang Inasal, Yonghe King, Hong Zhuang Yuan, and Smashburger.

The company also has a stake in SuperFoods Group, which owns Highlands Coffee and Hard Rock Cafe franchised stores in Vietnam.

"Combined with Highlands Coffee, with business mostly in Vietnam, this acquisition will enable JFC to become an important player in the large, fast-growing and profitable coffee business," said Caktiong.

"CBTL will be JFC’s second-largest business after Jollibee brand while coffee business will account for 14% of JFC’s worldwide system sales. Our priority is to accelerate the growth of The Coffee Bean and Tea Leaf® brand particularly in Asia, by strengthening its brand development, marketing and franchise support system," he added.

As of 1:30 p.m. on Wednesday, shares of JFC were trading down by P6.80 or 2.49% to P266.00 apiece versus Tuesday's close of P272.80 per share. — MDM, GMA News