LOCAL fast-food giant Jollibee Foods Corp. (JFC) on Wednesday said it will buy the operator of The Coffee Bean and Tea Leaf (CBTL) brand, marking the company’s largest multinational acquisition.
In its disclosure to the Philippine Stock Exchange, the company said it is buying the entire company that owns the CBTL brand for $350 million on a debt-free basis, or the acquired company will have no debts upon acquisition.
The company, through its international unit Jollibee Worldwide Pte. Ltd., will first invest $100 million in a new Singapore-based holding company called Java Ventures Llc. that will acquire the CBTL from its owners based in Los Angeles, California, including International Coffee and Tea.
Java Ventures will eventually own the CBTL brand.
Jollibee’s $100-million investment will represent 80 percent of the equity of the holding company as CBTL will be consolidated into JFC’s financial statements immediately upon acquisition. The balance of $250 million will serve as its advances to the new holding company.
This holding company plans to issue within six to nine months preferred shares worth $250 million, which will be used to repay JFC’s advances, it said.
The CBTL sellers include Advent Coffee Holdings Corp., Alexandria II Corp., CBTL Holdings Corp., The Sassoon Group and ICT Incentive Holdings. “The acquisition of The Coffee Bean and Tea Leaf brand will be JFC’s largest and most multinational so far with business presence in 27 countries,” it said.
This coffee franchise will add 14 percent to its global system-wide sales, 26 percent to its total store network and will bring the contribution of international business to worldwide sales to 36 percent.
JFC vision
It said the transaction “will bring JFC closer to its vision to be one of the top 5 restaurant companies in the world in terms of market capitalization.”
CBTL will now become its second-largest business after Jollibee brand, while coffee business will account for 14 percent of its worldwide system sales.
“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,” it said.
The members of the family that owns Viet Thai International Joint Stock Co.—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 that will own CBTL with an equity share of 20 percent.
The Highlands Coffee was supposed to go public in three to five years after it was acquired by JFC or in July 2019. The company said the said IPO plans is now being “delayed and restudied in the light of the acquisition of CBTL.”
Founded in 1963, CBTL had, by the end of last year, 1,189 outlets: company-owned at 336 and franchised 853. At least 284 are in the US; 447 in Southeast Asia, 139 in the the Philippines, 101 in Indonesia, 99 in Malaysia and 61 in Singapore; 336 in other Asian countries including 292 in South Korea and 122 in other countries, such as Kuwait (36), Qatar (28) and India (27).
CBTL’s total revenue last year was at $313 million and total earnings before interest, taxes, depreciation and amortization was $23.7 million.
CBTL uses hand-roasted coffee beans and hand-blended teas from farms in various countries like Costa Rica, Colombia, Kenya, Indonesia, Jamaica, Thailand and Sri Lanka.