Jollibee Buys The Coffee Bean & Tea Leaf for $350M

The acquisition means Jollibee is now entering the global coffee chain market, competing with Starbucks and other players.

Jollibee Coffee Bean & Tea Leaf

Philippine-listed Jollibee Foods Corporation (JFC) announced that it is acquiring American specialty coffee and tea brand The Coffee Bean & Tea Leaf for $350 million (P51 billion).

The acquisition is an apparent move by Jollibee to compete with global coffee chain Starbucks.

As at end of 2018, The Coffee Bean & Tea Leaf had 1,189 outlets, of which 284 are in the US, 447 in Southeast Asia (139 in the Philippines, 101 in Indonesia, 99 in Malaysia, and 61 in Singapore), 336 in other Asian countries, and 122 in other regions. Its total revenue in 2018 was $313 million.

Coffee Bean uses only hand-roasted coffee beans and hand-blended teas from farms in various countries like Costa Rica, Colombia, Kenya, Indonesia, Jamaica, Thailand, and Sri Lanka.

The company is known for its original Ice Blended coffee and tea drinks, hot coffee drinks, and hot and iced tea drinks. It also sells a variety of whole bean coffees, whole leaf teas, flavored powders, and baked food.

In a disclosure to the Philippine Stock Exchange, Jollibee said its wholly-owned subsidiary Jollibee Worldwide Pte Ltd Singapore (JWPL) has agreed to invest $100 million in a new Singapore-based holding firm that will handle the acquisition of the California-based coffee and tea shop chain.

Jollibee said the total consideration for the acquisition is $350 million on a debt-free basis. Initially, the fast-food company through JWPL will finance the entire acquisition through a bridge loan.

Jollibee’s $100 million investment will represent 80 per cent of the equity of the new holding company, with the balance of $250 million as advances to the new firm. The holding company plans to issue within six to nine months preferred shares for an aggregate consideration of at least $250 million to repay JFC’s advances.

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Members of the family that owns Viet Thai International Joint Stock Company, Jollibee’s partner in the Superfoods Group of business, which owns and operates Highlands Coffee and Pho 24 with business mainly in Vietnam, will subscribe to the capital of the new holding company with an equity share of 20 per cent.

The holding company is planned for initial public offering in 3 to 5 years.

The acquisition of the US coffee and tea brand will be Jollibee’s largest and most multinational so far, according to Jollibee Foods Corporation Chairman Tony Tan Caktiong.

“The deal will bring international business’ contribution to 36 per cent of worldwide sales and will bring Jollibee closer to its vision to be one of the top five restaurant companies in the world in terms of market capitalisation,” Tan Caktiong said.

Coffee Bean will be Jollibee’s second-largest business after the Jollibee brand while coffee business will account for 14 per cent of the Philippine company’s worldwide system sales, the chairman added.

“Our priority is to accelerate the growth of The Coffee Bean and Tea Leaf brand particularly in Asia, by strengthening its brand development, marketing, and franchise support system,” he said. –