Restaurant chain operator Jollibee Foods Corp. said Wednesday it signed a $10.4-million deal to buy out its partner and take full ownership of Yonghe King chain in China.
Jollibee said in a disclosure to the stock exchange wholly-owned unit Jollibee Worldwide Pte. Ltd. signed an agreement with Hua Xia Harvest Holdings Pte. Ltd. to acquire the latter’s 30-percent equity shareholding in the joint venture entity Happy Bee Foods Processing Pte. Ltd.
Prior to the acquisition, JWPL owned a 70-percent interest in Happy Bee, which operates a manufacturing facility in Anhui, China that currently services the requirements of Yonghe King, its flagship restaurant in China, as well as other business institutions other than JFC’s brands.
Yonghe King is currently Jollibee’s largest business in China comprising 321 stores and contributing 10 percent of its systemwide sales worldwide.
Under the agreement, Hua Xia will sell and convey to JWPL its 30-percent equity interests in Happy Bee. In exchange, Happy Bee shall sell and convey to Hua Xia’s nominees entity the assets and contracts related to the third-party supply business.
“The objectives of the acquisition of the 30 percent ownership of Happy Bee, essentially an equity share and asset swap, are for Jollibee to concentrate on supporting growth of its Yonghe King business an on further improving its food quality and increasing assurance on food safety,” the fast-food giant in a disclosure said.
Jollibee said Yonghe King planned to accelerate its store network growth in 2016 and in the years ahead.
The transfer of shares and assets shall be subject to appropriate governmental and regulatory approvals which are expected to be completed within 2016.
Jollibee operates 20 commissaries worldwide, including 13 in the Philippines, 3 in China and 1 each in the United States and Vietnam.
It builds and operates its own commissary to supply food products to its restaurants. This supply chain strategy aims to achieve superiority in product quality and a very high level of assurance in food safety.
Aside from Yonghe King, Jollibee also owns several brands in China, including Hong Zhuang Yuan with has 42 stores and San Pin Wang with 59 outlets.
In 2015, Jollibee’s net income fell 10.4 percent to P4.8 billion from P5.3 billion posted in 2014 due to extraordinary costs.
