Jollibee makes biggest overseas investment in American burger chain
Filipino-owned Asian fast-food giant Jollibee Foods Corp. (JFC) has made its biggest overseas investment to date by buying into the American company that owns and operates fast-growing premium burger chain Smashburger.
Through wholly owned unit Bee Good Inc. (BGI), Jollibee has entered into a deal to acquire 40 percent of Denver-based Smashburger Master LLC for $99 million. This deal includes an option to increase its interest by another 35 percent between 2018 and 2021 as well as the balance to take up the remaining 25 percent between 2019 and 2026, the local fast-food giant disclosed to the Philippine Stock Exchange on Tuesday.
Smashburger is a burger chain based in the US known for 100 percent certified Angus beef burgers that are smashed on the grill to sear in the juices, creating what has been described as “upscale quality burger served at a great value.” Smashburger is “one of the best tasting burgers in the US,” the local company said.
“This acquisition will make JFC’s presence in the US more significant, going beyond the Filipino market and serving mainstream consumers in the $100 billion US burger market, a food segment which is estimated to be almost three times larger than the pizza, sandwich or coffee segments in terms of sales,” JFC chair and founder Tony Tan Caktiong said.
The US burger chain—noted as one of the fastest growing brands in the US—currently has 339 restaurants worldwide and in seven foreign countries with sales of about $339 million in 2015 or equivalent to 12 percent of JFC’s worldwide sales for the same period.
The acquisition of the initial 40 percent was based on a $335 million enterprise value and is expected to be closed within 2015. The purchase of the remaining shares is dependent on the achievement of certain financial targets.
For JFC, this deal is also seen to make the US one of its most important markets and drivers of long-term growth. RAM
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