Home-grown fast-food chain operator Jollibee Foods Corp. (JFC) is acquiring a 70-percent stake in South Korean coffee brand Compose Coffee for $340 million as it aims to grow its coffee and tea business.
JFC said in a disclosure to the stock exchange Tuesday its unit Jollibee Worldwide Pte. Ltd. signed a definitive agreement with Compose Coffee Co., Ltd., a move that will allow the company to get a share in the fast-growing international value coffee market in South Korea, which ranks third globally in terms of coffee consumption per capita.
“The business that Compose Coffee has built in the past 10 years is impressive and we are excited to play a major role in its next phase of growth. We believe that Compose Coffee is a compelling strategic fit for JFC and is on track to becoming the largest, fastest growing and leading value coffee player in South Korea,” said JFC chairman Tony Tan Caktiong.
The remaining shareholdings will be held by Titan Dining II LP (Titan Fund II) and Elevation Equity Partners Korea Limited (Elevation) with effective shareholdings of 5 percent and 25 percent, respectively.
Following the disclosure, the Philippine Stock Exchange (PSE) suspended the trading of JFC shares since the acquisition cost is more than 10 percent of the company’s book value.
Founded in Busan, Compose Coffee had more than 2,600 stores as of end-June 2024, making it one South Korea’s leading coffee franchises. On its 10th anniversary, Compose Coffee announced V (Kim Taehyung) of BTS as their new brand ambassador.
It will be JFC’s biggest brand in terms of number of stores. This will bring Jollibee Group’s store network closer to 10,000 stores, more than 66 percent of which will be outside the Philippines.
JFC said Compose Coffee has a debt-free balance sheet, superior cash returns and excellent profitability margins, evidenced by its high double-digit Earnings before Interests, taxes and depreciation and amortization (EBITDA) and EBIT margins due to its capital-light, 100 percent franchised business model.
Compose Coffee will be consolidated into JFC’s financial statements immediately upon completion of the acquisition.
The fast-food giant said the acquisition would add 2 percent to its revenues, 12 percent to EBIT and 34 percent to store count.
The purchase will also further strengthen JFC’s balance sheet since Compose Coffee has no existing loans nor non-trade obligations.
JFC started investing in coffee and tea segment of the restaurant market when it acquired American specialty coffee and tea brand The Coffee Bean & Tea Leaf (CBTL) in 2019 for $350 million.
Jollibee announced in March its investment in Botrista Inc. (Botrista), a company that has developed a robotic drinks solution for the food industry.
Editor’s Note: This is an updated article. Originally posted with the headline “Jollibee expands brand portfolio, acquires 70% stake in South Korea’s ‘Compose Coffee’”.