Hungry Jollibee eyeing big bite of UK sandwich chain

Homegrown fast-food giant Jollibee Foods Corp. (JFC) is interested to bid for UK-based international sandwich chain Pret A Manger, continuing efforts to scout for globalization opportunities.

“As you know, we continue to actively explore all the potential and available acquisition opportunities in the market. While Pret is one of the names that come up every now and then, especially since the time they were reported to be in the process of doing an IPO (initial public offering) in the US stock market, we did not make any formal nonbinding bid,” JFC founder and chair Tony Tan Caktiong said in a text-reply to Inquirer on Tuesday.

“It continues, however, to be brought to our attention. So if it does look worthwhile and would be a good fit for JFC, I would not rule out exploring Pret as a potential acquisition,” Tan Caktiong added.

Based on a report from Reuters, JFC has been holding talks with an adviser over a potential offer for Pret A Manager worth over $1 billion.

A prospective acquisition of Pret, which operates over 400 stores worldwide, would allow JFC to operate a restaurant format that caters to a more discerning market. This chain offers organic coffee as well as sandwiches, salads, baguettes and wraps that are freshly prepared in its kitchens every day.

Valued by the market at around $5.3 billion (P265 billion), JFC has grown to be Asia’s most valuable restaurant chain—and one of the most valuable in the world—through a series of local and offshore acquisitions alongside organic expansion in the last two decades. Apart from gobbling up a number of other quick service restaurant (QSR) brands in the Philippines, it has acquired well-known restaurant brands in China (such as Yonghe King) and Vietnam (Highlands Coffee and Pho24) and likewise gained a footprint in mainstream American hamburger market by investing in Smashburger.

If the Pret deal pushes through, it would be JFC’s biggest acquisition to date.

“It seems to have good operational fit to JFC since the company has extensive experience in food manufacturing and preparation,” said Jose Mari Lacson, head of research at fund management firm ATR Asset Management.

If JFC wanted a controlling interest in Pret, Lacson said the fast-food firm might have to borrow money to fund such an acquisition.

“Robust cash flows will enable them to do that, possibly up to $1 billion but all that still would be a lot of debt relative to its capital history,” he said.

When the Philippine Stock Exchange asked JFC to comment on the report, company finance officer Ysmael Baysa said: “Very few selected companies reach a completion of acquisition while the vast majority of potential targets does not.”

Including sales of affiliate overseas stores, JFC’s offshore business now accounts for 30 percent of total business. The company’s long-term goal is to grow the share of overseas business to 50 percent of total.