A Coffee Bean & Tea Leaf store in Bandar Seri Begawan in Brunei. INQUIRER.net FILE PHOTO
MANILA, Philippines – Homegrown fast-food giant Jollibee Foods Corporation (JFC) has bagged its biggest multinational acquisition to date with a US$350-million deal to take over American specialty coffee and tea brand The Coffee Bean & Tea Leaf (CBTL).
The total consideration for this acquisition is $350 million on a debt-free basis but Jollibee’s net investment is estimated at $100 million, the company disclosed to the Philippine Stock Exchange on Wednesday.
Jollibee, through Singapore-based subsidiary Jollibee Worldwide Pte Ltd., will initially finance the entire acquisition through a bridge loan.
Its investment of $100 million represents 80 percent of the equity of the holding company that will acquire 100 percent of CBTL. The balance of $250 million will be made as advances to the new holding company.
This holding company plans to issue within six to nine months preferred shares of at least $250 million, which will be used to repay Jollibee’s advances.
Members of the family that owns Viet Thai International Joint Stock Company (VTI), JFC’s partner in the Superfoods Group of business which owns and operates Highlands Coffee and Pho 24 with business mainly in Vietnam, will subscribe to the capital of the new holding company with an equity share of 20 percent. The holding company is planned for initial public offering in three to five years.
Shares of JFC – the most actively traded company at the stock market on Wednesday -declined by 7.99 percent on concerns that the CBTL acquisition will constrain its earnings moving forward.
“Market noticed that CBTL posted a $21-million loss in 2018, so the initial euphoria of the news died down. Wait-and-see attitude prevails, waiting for JFC to prove they can turn the company around,” said Eagle Equities president Joseph Roxas
CBTL, which is based in Los Angeles, California, will be consolidated into JFC’s financial statements immediately upon acquisition.
“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,” Jollibee chairman Tony Tan Caktiong said.
“This will add 14 percent to its global system-wide sales, 26 percent to its total store network, will bring international business’ contribution to 36 percent of worldwide sales and will bring JFC closer to its vision to be one of the top five restaurant companies in the world in terms of market capitalization,” said Caktiong.
“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. CBTL will be JFC’s second-largest business after Jollibee brand while coffee business will account for 14 percent of JFC’s worldwide system sales,” he said.
“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,” Caktiong added.