The Philippines' largest fast-food company, Jollibee Foods Corp, has made another leap forward in its ambitious overseas expansion, with an unusually risky deal in the US.
The Manila-headquartered company has agreed to buy 100% of loss-making Los Angeles-based chain The Coffee & Tea Leaf for $350 million, it said in a filing to the Philippine stock exchange on Wednesday.
"The acquisition of The Coffee Bean & Tea Leaf will be JFC's largest and most multinational so far, with business presence in 27 countries," said Jollibee's chairman and founder Tony Tan Caktiong.
The price tag is above the $210 million it paid for US's Smashburger in 2018. Jollibee's shares fell by about 8% in Manila.
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The Coffee Bean & Tea Leaf had 1,189 outlets at the end of 2018, of which 284 are in the US, 447 in Southeast Asia, 336 in other Asian countries and 122 in other regions. The chain will add 14% to Jollibee’s sales, grow its network by 26% and will lift overseas’ contribution to 36% of worldwide sales.
The ambitious company wants to become one of the top five restaurant companies in the world in terms of market capitalisation.
Combined with Highlands Coffee, with business mostly in Vietnam, this acquisition will make Jollibee a player in the coffee business. The Coffee Bean & Tea Leaf will be Jollibee’s second-largest business after the Jollibee brand while the coffee business will account for 14% of the group’s worldwide system sales.