Jollibee Foods Corporation (JFC), one of Asia’s largest food service companies, is acquiring 100 percent of The Coffee Bean & Tea Leaf specialty coffee and tea brand (CBTL), based in Los Angeles, California, USA for US$350 million.
“The acquisition of The Coffee Bean & Tea Leaf brand will be JFC’s largest and most multinational so far with business presence in 27 countries,” said JFC Chairman Tony Tan Caktiong.
He noted that, “this will add 14 percent to its global system-wide sales, 26 percent to its total store network, will bring international business’ contribution to 36 percent of worldwide sales and will bring JFC closer to its vision to be one of the top 5 restaurant companies in the world in terms of market capitalization.”
“CBTL will be JFC’s second largest business after Jollibee brand while coffee business will account for 14 percent of JFC’s worldwide system sales. Our priority is to accelerate the growth of The Coffee Bean and Tea Leaf brand particularly in Asia, by strengthening its brand development, marketing, and franchise support system.”
Combined with Highlands Coffee, with business mostly in Vietnam, this acquisition will enable JFC to become an important player in the large, fast growing and profitable coffee business.
In a disclosure to the Philippine Stock Exchange, said the total consideration for this acquisition is US$ 350 million in cash on a debt-free basis (the acquired business will have no debt upon acquisition).
Jollibee said its wholly-owned subsidiary Jollibee Worldwide Pte Ltd (JWPL, Singapore) has entered into an agreement to invest US$100 million in a new Singapore-based holding company that will make the acquisition.
The acquiring entity will be JWPL’s wholly-owned subsidiary Java Ventures, LLC (United States), which will eventually be a wholly-owned subsidiary of the new holding company.
Initially, JFC through JWPL will finance the entire acquisition through a bridge loan. JFC’s US$100 million investment will represent 80 percent of the equity of the holding company with the balance of US$250 million as advances to the new holding company.
This holding company plans to issue within 6 to 9 months preferred shares (on terms to be determined) for an aggregate consideration of at least US$250 million, which will be used to repay JFC’s advances.
Members of the family that owns Viet Thai International Joint Stock Company (VTI), JFC’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 percent.
The holding company is planned for initial public offering (IPO) in 3 to 5 years. The initial public offering of Highlands Coffee which was planned for July 2019 per the agreement between JFC and VTI is being delayed and re-studied in the light of the acquisition of CBTL.
The Coffee Bean & Tea Leaf is a coffee and tea shop chain owned by International Coffee & Tea, LLC based in Los Angeles, California.
Founded in 1963, CBTL as at end of 2018, had 1,189 outlets (company owned 336, franchised 853), of which 284 are in the US, 447 in Southeast Asia (Philippines 139, Indonesia 101, Malaysia 99, Singapore 61), 336 in other Asian countries (South Korea 292), and 122 in other regions (Kuwait 36, Qatar 28, India 27).
Total revenue in 2018 was US$313 million. Total EBITDA was US423.7 million, as calculated by Jollibee Foods Corporation based on the 2018 Audited Financial Statements of International Coffee & Tea, LLC and Subsidiaries.