ASIAN fastfood giant Jollibee Foods Corp. has entered the mainstream American hamburger market by buying into the American company that owns and operates fast-growing burger chain Smashburger.
Through wholly owned unit Bee Good Inc. (BGI), Jollibee entered into a deal to acquire an initial 40-percent stake in Denver-based Smashburger Master LLC for $99 million with an option to acquire full control of the privately held food chain through 2026.
The deal, which was based on an enterprise value of $335 million, allows the Filipino fast-food group to increase its interest by another 35 percent between 2018 and 2021 as well as acquire the remaining 25 percent between 2019 and 2026, based on the Philippine Stock Exchange filing on Tuesday.
The acquisition of the initial 40 percent is expected to be closed within 2015. The purchase of the remaining shares is dependent on the achievement of certain financial targets.
Smashburger is an American burger chain known for serving 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.”
“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 in a statement.
The US burger chain currently has 339 restaurants in 35 US territories and seven foreign countries with sales of about $339 million in 2015, equivalent to 12 percent of JFC’s worldwide sales for the same period. Its system-wide sales have expanded by an annual rate of 30 percent between 2011 and 2015 while store network has been growing by 20 percent annually.
“We at Smashburger are excited about our new strategic partnership with Jollibee,” said Rick Schaden, chair and founder of Smashburger. “As founders and entrepreneurs, we both have built teams that focus on bringing the highest and best-tasting food to our restaurant categories.”
Jollibee has 3,013 restaurants worldwide, of which 2,384 are in the Philippines. Since 2014, Jollibee has acquired a number of local brands like Chowking, Red Ribbon and Mang Inasal and likewise gobbled up overseas brands, mostly in mainland China.