Jollibee ponders bid for British sandwich chain

Pret A Manger has more than 400 shops worldwide, including this one in Washington. Jollibee operates 2,700 restaurant outlets, including its eponymous chain of fast-food stores with the ubiquitous smiling bee mascot.
Pret A Manger has more than 400 shops worldwide, including this one in Washington. Jollibee operates 2,700 restaurant outlets, including its eponymous chain of fast-food stores with the ubiquitous smiling bee mascot.PHOTOS: REUTERS
Pret A Manger has more than 400 shops worldwide, including this one in Washington. Jollibee operates 2,700 restaurant outlets, including its eponymous chain of fast-food stores with the ubiquitous smiling bee mascot.
Pret A Manger has more than 400 shops worldwide, including this one in Washington. Jollibee operates 2,700 restaurant outlets, including its eponymous chain of fast-food stores with the ubiquitous smiling bee mascot.PHOTOS: REUTERS

Philippine fast-food chain's offer could value Pret A Manger at over $1.35b, sources say

HONG KONG • Jollibee Foods, popular in the Philippines for its sweet-style spaghetti and fried chicken, is exploring a bid for Britain's Pret A Manger, which could value the upscale sandwich chain at over US$1 billion (S$1.35 billion), sources familiar with the matter said.

The deal would make an unlikely pairing. Jollibee has a huge following in the Philippines, as well as with Filipinos overseas, for its burgers and other fast-food meals.

Pret, meanwhile, has built its reputation selling organic coffee and wholesome sandwiches to office workers in Britain and in cities like Hong Kong and New York.

Jollibee had been holding talks with an adviser over an offer for Pret, the sources said.

They declined to be named as the talks were not public.

The sources said Jollibee's offer could value Pret at over US$1 billion, based on its 2016 core earnings of just over £93 million (S$169 million).

A successful bid by Jollibee would mark the biggest overseas deal to date by the Filipino company, and potentially one of the biggest ever outbound deals from the Philippines.

The deal would make an unlikely pairing. Jollibee has a huge following in the Philippines, as well as with Filipinos overseas, for its burgers and other fast-food meals. Pret, meanwhile, has built its reputation selling organic coffee and wholesome sandwiches to office workers in Britain and in cities like Hong Kong and New York.

Jollibee, with a market value of US$5.2 billion, operates the largest food service network in the Philippines with 2,700 restaurant outlets, including its eponymous chain of fast-food stores with the ubiquitous smiling bee logo. But it has also been expanding across South-east Asia and beyond, hoping to appeal to lucrative local consumers as well as Filipino expatriates with coffee, donut and noodle offerings.

Pret, a chain with more than 400 shops worldwide, has built its reputation selling gourmet baguettes and offerings like wild crayfish-and-rocket sandwiches to office workers, and has since embraced health options like dairy-free coconut porridge.

Citing sources, Reuters reported earlier this year that Pret's private equity owner, Bridgepoint, was preparing for a New York listing later this year.

Pret reported 2016 revenues of £776 million.

The potential offer for Pret would compare with higher market values for rivals such as Shake Shack and Chipotle. The trading multiples for the US-listed rivals would imply a price more than twice what Jollibee is considering, analysts said.

Still, the company's interest in Pret is still at an early stage and it has not yet finalised a valuation or had direct discussions with Pret, one of the sources said.

Jollibee declined to comment on Pret but said acquisition of new businesses was part of its growth strategy.

"Very few selected companies reach completion of acquisition, while the vast majority of potential targets do not," chief financial officer Ysmael V. Baysa told Reuters. Mr Baysa said Jollibee had not submitted a formal or informal bid for any company in recent months.

Bridgepoint and Pret declined to comment.

REUTERS

A version of this article appeared in the print edition of The Straits Times on September 20, 2017, with the headline 'Jollibee ponders bid for British sandwich chain'. Print Edition | Subscribe