Philippine restaurant operator Jollibee Foods is to buy US cafe brand The Coffee Bean & Tea Leaf outright for US $350 million.
The acquisition is Jollibee’s largest to date, and will involve a $100 million investment in a new Singaporean holding firm to handle the process, constituting an 80 per cent equity of the business. The $250 million balance is to be regarded as an advance to the firm, which will issue preferred shares within six to nine months to repay it. The takeover will be financed initially through a bridge loan.
The remaining 20 per cent equity in the new firm will be taken by members of the family operating Jollibee partner Viet Thai International Joint Stock Company, which runs the Highlands Coffee and Pho 24 franchises, primarily within Vietnam.
An IPO for the new holding company is expected to be made within three-to-five years.
The Coffee Bean & Tea Leaf is owned by California-based International Coffee and Tea. It recorded revenue of $313 million last year, however analysts estimate it lost about $21 million.
“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,” said Jollibee Foods Corporation chairman Tan Caktiong.
“Our priority is to accelerate the growth of The Coffee Bean & Tea Leaf brand particularly in Asia, by strengthening its brand development, marketing, and franchise support system.”
The Coffee Bean & Tea Leaf operated 1189 locations as of the end of last year, around a third of which are in Southeast Asia.