MANILA: Philippines' Jollibee Foods Corp said on Wednesday (Jul 24) it is spending US$350 million to buy US brand Coffee Bean & Tea Leaf.
In a filing to the Philippine Stock Exchange, Jollibee said it had entered into an agreement through its wholly owned subsidiary Jollibee Worldwide to invest US$100 million in a new Singapore-based holding company to acquire 100 per cent of the Los Angeles-based speciality coffee and tea brand.
It will invest US$100 million for an 80 per cent share in a Singapore holding company that will acquire The Coffee Bean & Tea Leaf. The remaining 20 per cent stake will be owned by JFC's partner in its Vietnam coffee and restaurant business.
JFC will invest another US$250 million, which will be paid back by the holding company.
The acquiring entity will be Jollibee Worldwide's subsidiary Java Ventures, which will eventually be a subsidiary of the new holding company.
Jollibee operates the largest fast-food chain in the Philippines with 3,195 restaurants. It also operates 1,418 stores across various brands overseas.
"The acquisition of The Coffee Bean & Tea Leaf brand will be (Jollibee Foods Corp)'s largest and most multinational so far with business presence in 27 countries," said Jollibee chairman Tony Tan Caktiong in the filing.
"This will add 14 per cent to its global system-wide sales, 26 per cent to its total store network, will bring international business' contribution to 36 per cent of worldwide sales and will bring (Jollibee Foods Corp) closer to its vision to be one of the top five restaurant companies in the world in terms of market capitalisation."
Jollibee also operates Highlands Coffee in Vietnam, among other brands worldwide.
"Combined with Highlands Coffee, with business mostly in Vietnam, this acquisition will enable (Jollibee Foods Corp) to become an independent player in the large, fast-growing and profitable coffee business," said Mr Tan.
The Coffee Bean & Tea Leaf will be Jollibee's second-largest business after the Jollibee brand, and coffee business will account for 14 per cent of its worldwide system sales, he said, adding the priority was to "accelerate the growth" of Coffee Bean & Tea Leaf's brand, particularly in Asia.
An initial public offering of Highlands Coffee initially planned for July this year will be delayed and "re-studied" in light of the acquisition, according to the stock exchange disclosure.
Jollibee's announcement comes as the food operator pushes for sales outside its home market.
READ: Busy as a Jollibee: Asia's fast-food giant expands abroad
Its chief executive told Reuters last October that it hopes to generate half its sales outside the Philippines within five to seven years, up from about 30 per cent.
It also hopes to double its revenue in five years, as it expands its own chains and buys others.
Editor's note: A previous version of this story said that Jollibee is buying Coffee Bean and Tea Leaf for US$100 million. That is incorrect - Jollibee is investing US$100 million in the holding company that will acquire Coffee Bean. We apologise for the error.