HOMEGROWN fast-food giant Jollibee Foods Corp. (JFC) bared its strategic plans for soon-to-be acquired South Korean coffee chain Compose Coffee.
JFC Chief Financial Officer Richard Shin told analysts that the acquisition disclosed by the company earlier this month could be approved by the Korea Fair Trade Commission next month.
“We anticipate [closure of the transaction] sometime [by] mid to end August. To be conservative, let’s just call it end-August. So, we’re waiting for that, upon which, on that date, the deal will be officially closed,” Shin said.
JFC is looking to purchase, through unit Jollibee Worldwide Pte. Ltd, 70 percent of the Korean coffee chain for $238 million to expand its coffee and tea business.
JFC’s majority owned Titan Fund and South Korean private-equity firm Elevation will take the remaining 5 percent and 25 percent, taking the total transaction to around $340 million or KRW470 billion.
“The profit margins in this business are extremely lucrative,” Shin said, adding, “what I really love about this deal is that a 2 percent top line revenue contribution creates a 12 percent EBIT (earnings before interest and taxes) bottom line contribution.”
The JFC finance chief said they would not be investing anything for capital expenditures as Compose Coffee stores in Korea were 100 percent franchised.
Majority of the income stream from Compose Coffee will come from sales of blended and roasted coffee beans to its franchisees.
JFC also said that the acquisition would not directly affect the current coffee and tea brands under the group.
EARL JOHN ALFARO
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