HOMEGROWN fast-food giant Jollibee Foods Corp. (JFC) has completed the roughly $340 million acquisition of popular South Korean coffee chain Compose Coffee.
“The transaction has been completed on August 16, 2024,” the company told the Philippine Stock Exchange (PSE) in an amended disclosure on Friday.
The purchase price was KRW470 billion (around $340 million or P19.77 billion), subject to adjustment upon closing, with closing conditions to include regulatory approval in Korea, JFC said.
The fast-food giant earlier announced it planned to buy a 70-percent stake in Compose Coffee through its subsidiary Jollibee Worldwide Pte. Ltd. (JWPL) for $238 million, while majority-owned Titan Dining Partners II Ltd. (Titan Fund II) would take 5 percent and the remaining 25 percent would be held by private equity firm Elevation Equity Partners Korea Ltd.
JFC said it would pay for the acquisition “through a mix of debt and cash, of which 47 percent, or $111.8 million (P6.4 billion), will be borrowed, and the remaining will be paid through the company’s excess cash.”
Under the share purchase agreement, Compose Coffee will have three board seats: two for JWPL and one for Elevation.
JFC Chief Financial Officer Richard Shin will serve as chairman while Compose Coffee’s management positions will be retained.
“Compose Coffee is a strategic fit to the Jollibee Group’s coffee and tea segment, and is value accretive,” Shin said, adding that the acquisition should strengthen JFC’s balance sheet as the Korean coffee chain had no existing loans or non-trade obligations.
Compose Coffee operates 2,470 stores in South Korea, all franchised, giving it a debt-free balance sheet as well as good cash returns and profit margins, JFC noted.
Acquiring Compose Coffee will expand JFC’s global store network to 10,000 outlets.
The fast-food giant has upped its 2024 guidance for new store openings after consolidating Compose Coffee into its portfolio. It is now looking at opening 750 to 820 new stores and 42- to 25-percent store network growth, while trimming programmed capital expenditure to around P16 to P18 billion from P20 to P23 billion previously.
The company earlier reported a group net income of P5.66 billion for the first half of 2024, up 28.9 percent from last year.
On Friday, JFC shares soared 3.36 percent to close at P252.20 each amid a 2.31-percent advance of the Philippine Stock Exchange index.
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