PHILIPPINES – Jollibee Foods, the Philippines’ largest fast-food chain, has announced plans to acquire a majority stake in South Korea’s Compose Coffee in a deal valuing the target at US$340 million.
Jollibee’s unit, Jollibee Worldwide Pte, will purchase 70 percent of the privately held Compose Coffee for US$238 million, while its majority-owned Titan Fund will acquire an additional 5 percent.
The remaining 25 percent will be held by private equity firm Elevation.
“This is a good move by Jollibee to further expand its global footprint and take advantage of attractive opportunities in promising markets,” said Juan Paolo Colet, managing director at investment bank China Bank Capital in Manila.
He added that the acquisition is expected to be cash-accretive, creating shareholder value over the long run.
Compose Coffee, which has 2,470 franchised stores, boasts a debt-free balance sheet, strong cash returns, and healthy profit margins.
This acquisition will increase Jollibee’s global store network to 10,000. Jollibee highlighted that the investment provides access to South Korea, the third-largest coffee consumer per capita globally.
Founded in Busan in 2014, Compose Coffee includes a roasting facility.
Jollibee dominates the fast-food market in the Philippines, outperforming competitors such as McDonald’s and Yum Brands’ KFC.
In 2019, Jollibee invested US$100 million to acquire the loss-making Coffee Bean & Tea Leaf.
This latest acquisition aligns with Jollibee’s strategic plans to expand its brand internationally and significantly grow its presence in China.
The company aims to triple its net income within five years and plans to open 700 to 750 new outlets this year, focusing on multiple lower-tier cities in China through franchising.
Jollibee reported a profit of 8.8 billion pesos (US$149.56 million) in 2023, slightly below analysts’ consensus estimate of 9 billion pesos (US$152.96M) but marking a 16 percent increase from the previous year.
To support its growth plans this year, Jollibee is allocating 20 billion (US$339.9M) to 23 billion pesos (US$390.9M) in capital spending.
The company projects an operating profit growth of 10 percent to 15 percent in 2024, following a 45 percent rise to a new record in the past year.
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