Jollibee buys popular South Korean coffee chain for P20B, nears 10,000 Stores
Fast food tycoon Tony Tan Caktiong’s Jollibee Foods Corp. (JFC) struck a deal on Tuesday to purchase a majority stake in South Korea's Compose Coffee for $340 million (P20 billion), its biggest acquisition by store count.
JFC and subsidiary Titan Dining Partners II Ltd. will own 70 percent of Compose Coffee while Elevation Equity Partners Korea Limited (Elevation) will own 25 percent following the signing of definitive agreements.
Big picture
This is JFC’s second-largest acquisition by value after it agreed to buy Coffee Bean & Tea Leaf for $350 million in 2019.
Tan is going all in on coffee and tea with his two largest purchases being made in the segment.
Large bets are being made globally as the group aims to triple profits to over P26 billion by 2028 despite worries over a slowdown in China.
Jollibee nears 10,000-store mark
Compose Coffee, famed for its low-priced coffee drinks, started a decade ago in Busan before rapidly growing to over 2,600 outlets. It will be JFC’s biggest brand in terms of number of stores.
“It will bring JFC’s store network closer to 10,000 stores, more than 66 percent of which will be outside the Philippines. Compose Coffee will also further strengthen JFC’s balance sheet since it has no existing loans or non-trade obligations,” the fast food group said.
Immediate earnings boost
Compose Coffee will raise overall revenues by 2 percent.
It will also bring international business’s contribution to 41 percent of total revenues, raise earnings before interest and taxes by 12 percent, and hike its branch network by 34 percent.
Miguel R. Camus has been a reporter covering various domestic business topics since 2009.
