Fast-food giant Jollibee Foods Corp (JFC) is upsizing its coffee portfolio as part of ambitious plans to become one of the biggest restaurant companies in the world.
The Philippine firm plans to buy loss-making US brand Coffee Bean & Tea Leaf (CBTL) in a US$350 million (S$477 million) deal, its largest acquisition to date, it said in a stock exchange disclosure yesterday.
The Los Angeles-based coffee chain, which has about 1,200 outlets in 27 countries, will add 14 per cent to JFC's global sales and expand its store network by more than a quarter, JFC chairman Tony Tan Caktiong said in a filing to the Philippine Stock Exchange.
JFC said it will invest US$100 million for an 80 per cent stake in a Singapore holding company set up with Vietnamese partners. The remaining US$250 million will be paid back by the holding company.
The acquisition will bring JFC closer to its vision of being "one of the top five restaurant companies in the world in terms of market capitalisation", Mr Tan said.
Last year, it took over American fast-food chain Smashburger and invested $45 million in the master franchise holder of Hong Kong dim sum chain Tim Ho Wan in the Asia-Pacific. Its home-grown fast-food brand Jollibee has more than 1,000 outlets worldwide, including eight in Singapore.
Observers said JFC's latest acquisition puts it on track to becoming a formidable global food and beverage (F&B) player.
Associate Professor Lawrence Loh of the NUS Business School said the move provides a jump-start in multiple international markets.
JFC can "unlock more value out of CBTL, given its deep experience in the F&B sector, including its emerging coffee business", he added.
JFC is also co-owner of Vietnamese coffee shop chain Highlands Coffee, which has more than 300 branches in the Philippines and Vietnam.
Mr Amos Tan, a senior lecturer at Singapore Polytechnic's School of Business, said JFC is becoming "a force to be reckoned with". Apart from diversifying its portfolio, the acquisition of CBTL provides a wealth of valuable data points on consumer preference across the globe, he said.
CBTL was founded in 1963 in Los Angeles by Mr Herbert Hyman, and about three-quarters of its outlets worldwide are franchised. Last year, it reported a net loss of US$21 million on revenue of US$313 million.
In 1996, Singaporean brothers Victor and Sunny Sassoon bought the Asian franchise rights and opened the first outlet in Singapore. The Sassoon family eventually bought out the original owners and took over the entire business in 1998.
In 2013, three private equity firms took a large stake in the company, though the Sassoon family remains a shareholder. There are around 50 CBTL outlets in Singapore today.
JFC's share price fell 8 per cent yesterday amid concerns over how the acquisition will affect its earnings.