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MANILA (BLOOMBERG, REUTERS) – The Philippine company Jollibee Foods Corp. announced Wednesday that it would spend $ 350 million ($ 477.7 million) to acquire the largest corporation of Coffee Bean & Tea Leaf, a loss-making company.
The actions of the largest catering company in the Philippines have dropped more than two years.
Jollibee will invest 100 million US dollars in 80% of the shares of a Singaporean holding company created in partnership with Vietnamese partners to acquire Coffee Bean. The remaining $ 250 million will be in the form of advances, which will be repaid by the holding company.
The Los Angeles-based coffee bean will increase Jollibee's worldwide sales by 14 percent and expand its store network by more than a quarter, said Jollibee President Tony Tan Caktiong.
The coffee chain has 1,189 stores in the United States, Southeast Asia and the Middle East, and is growing rapidly in Asia. Nearly three quarters of its outlets are franchised. In 2018, it recorded a net loss of $ 21 million on revenues of $ 313 million.
Singapore's wealthy Sassoon family, a shareholder in Coffee Bean, has brought the brand to Asia, the South China Morning Post reported. According to a New York Times article published in April 2000, the family turned to coffee after Victor Sassoon, former organizer of the concert tour, met pop singer Paula Abdul in Los Angeles.
When Sassoon mentioned that he was planning to bring Coffee Bean to Singapore, Abdul told him: "It's the best product in the world. You need to get this company."
The acquisition of Coffee Bean is the largest ever to date by Jollibee, following the takeover of the US chain of fast food Smashburger, for 210.25 million US dollars, according to Bloomberg data.
The operation will bring international business contributions to 36% of total sales and will move toward its goal of becoming one of the top five catering companies in the world in terms of market capitalization, Jollibee said.
Shares of the famed catering company for its fried chicken fell by 8% in Manila, its largest decline since November 15, 2016.
The owners of Jollibee's Jollibee partner Viet Thai International Joint Stock Company in Highlands Coffee and Pho 24 will subscribe for the remaining 20% stake in Singapore.
The initial public offering scheduled for Highlands Coffee this month is delayed and under review.
"There is market skepticism that this purchase will generate profits, since the loss of Coffee Bean in 2018 represents about 12% of Jollibee's profit last year," said analyst Rachelle Cruz. AP Securities.
"Smashburger has not yet contributed positively to profits and here is another acquisition that will probably dilute profits in the next two or three years," she said, referring to the channel. American hamburger that Jollibee took over in 2018.
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