Restaurant operator Jollibee Foods Corp. said it is acquiring The Coffee Bean & Tea Leaf, a specialty coffee and tea chain based in Los Angeles, California, for $350 million.
The deal, JFC’s largest acquisition to date, will bring the country’s leading fast-food chain closer to its vision to become one of the five largest restaurant companies in the world in terms of market capitalization.
“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,” JFC chairman Tony Tan Caktiong said in a statement.
“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 5 restaurant companies in the world in terms of market capitalization,” Tan Caktiong said.
Combined with Highlands Coffee in Vietnam, JFC said the latest acquisition would enable it to become an important player in the large, fast-growing and profitable coffee business.
“CBTL will be JFC’s second-largest business after the Jollibee brand while the coffee business will account for 14 percent of JFC’s worldwide system sales. 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,” Tan Caktiong said.
JFC said wholly-owned subsidiary Jollibee Worldwide Pte Ltd. would initially invest $100 million, representing an 80-percent equity interest in a new Singapore-based holding company that will acquire 100 percent stake in CBTL. The remaining $250 million will be made as advances to the new holding company.
Meanwhile, the members of the family that owns Viet Thai International Joint Stock Company, JFC’s partner in the Superfoods Group of business, will subscribe to the remaining 20-percent interest in the new holding company.
JFC said the new holding company planned to issue within six to nine months preferred shares of at least $250 million to repay the company’s advances.
Founded in 1963, CBTL had 1,189 outlets as of end-2018, including 336 company-owned and 853 franchised stores. Of the total, 284 stores are in the US, 447 in Southeast Asia (Philippines 139, Indonesia 101, Malaysia 99, Singapore 61), 336 in other Asian countries (South Korea 292), and 122 in other regions (Kuwait 36, Qatar 28, India 27).
CBTL’s total revenue reached $313 million in 2018, while earnings before interest, tax, depreciation and amortization amounted to $23.7 million.
The stock price of JFC fell 8 percent Wednesday to P251.
JFC operates the largest foodservice network in the Philippines. It was operating 3,195 restaurant outlets in the country and 1,418 stores overseas as of June 30, 2019.