Jollibee Foods Corp., Philippines' largest restaurant company, said it has acquired Coffee Bean & Tea Leaf for $350 million.
According to a Philippine’s stock exchange disclosure, Jollibee, which also holds stakes in Smashburger and Tortas Fronteras, will invest $100 million for an 80 percent stake in a Singapore venture set up with Vietnamese partners to buy the coffee chain. The rest of the amount will come in the form of advances. Through Singapore-based subsidiary Jollibee Worldwide Pte Ltd., the company will initially finance the acquisition through a bridge loan.
The holding company will issue, within six to nine months, preferred shares of at least $250 million, which will be used to repay Jollibee’s advances.
Coffee Bean & Tea Leaf will be consolidated into JFC’s financial statements immediately upon acquisition.
The deal is the biggest yet for Jollibee, according to Bloomberg. It spent $210 million on Smashburger and $111.3 million on Mang Inasal. The company grabbed a 47 percent stake in Rick Bayless’ Mexican fast casual Tortas Fronteras for $12.4 million in September.
Los Angeles-based Coffee Bean & Tea Leaf will add 14 percent to Jollibee’s global sales and expand its base by more than a quarter. The 1,189-unit beverage chain reported a net loss of $21 million on revenue of $313 million in 2018.
The deal will boost contributions from international businesses to 36 percent of total sales for Jollibee. It has previously said it wants to become one of the top five resultant 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,” Jollibee 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 five restaurant companies in the world in terms of market capitalization.”
“Combined with Highlands Coffee, with business mostly in Vietnam, this acquisition will enable JFC to become an important player in the large, fast growing, and profitable coffee business,” he added. "CBTL will be JFC’s second largest business after Jollibee brand while 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."
Jollibee became the sole owner of Smashburger in December 2018. The company forked up $10 million to acquire the remaining 15 percent of the burger chain’s shares. Smashburger had 351 stores and accounted for 7 percent of Jollibee's systemwide sales at the time.
Coffee Bean & Tea Leaf was founded in 1963. Of its 1,189 locations last year, 336 were corporate run and 284 were domestic. The chain had EBITDA of $23.7 million.
When JFC took its stake in Tortas Frontera, it had 4,379 stores worldwide. That included 436 North American units: 349 Smashburgers, 37 Jollibee US stores, three Jollibee Canada locations, 32 Red Ribbons, and 15 Chowkings.
In the Philippines, the company operated 1,094 locations under the Jollibee brand, 542 Chowkings, 277 Greenwich stores, 434 Red Ribbon units, 415 Man Inasals, and 96 Burger Kings.