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The Philippines' iconic fast-food giant, Jollibee Foods (OTC: JBFCY)sweet-style spaghetti, burgers, and fried chicken offerings, is set to make a substantial move by acquiring a majority stake in South Korea’s Compose Coffee in a deal that values the coffee chain at $340 million. The announcement on Tuesday marks Jollibee’s most expansive international venture to date, underscoring its strategy to amplify its global footprint.
Through this agreement, Jollibee Worldwide Pte, Jollibee’s overseas subsidiary, will obtain 70% of Compose Coffee for $238 million. Additionally, its majority-owned Titan Fund will acquire an additional 5% stake. The private equity firm Elevation will retain the remaining 25% stake.
In the immediate aftermath of the announcement, shares of Jollibee (OTC: JBFCY), which boasts a market valuation of $4.29 billion, saw a 0.44% increase, outperforming the broader stock market index, which declined by 0.62% on the same day.
"Jollibee's decision to expand into the promising South Korean market is a strategic masterstroke," said Juan Paolo Colet, managing director at investment bank China Bank Capital in Manila. Colet pointed out that the acquisition is poised to be cash-accretive, potentially enhancing long-term shareholder value.
Compose Coffee, founded in Busan in 2014, operates 2,470 franchise stores and boasts a debt-free balance sheet coupled with strong cash returns and profit margins. This acquisition will significantly bolster Jollibee’s global store network, bringing it closer to the 10,000 mark.
With South Korea being the third-largest nation globally in coffee consumption per capita, Jollibee’s foray into this market is expected to yield robust benefits. The company, celebrated for its unique sweet-style spaghetti, burgers, and fried chicken offerings, has firmly established its dominance in the Philippines, consistently outperforming global fast-food giants like McDonald's (NYSE: MCD) and Yum Brands' KFC.
This strategic move follows Jollibee’s notable $100 million investment in 2019 to acquire the Coffee Bean & Tea Leaf, albeit a loss-making venture at the time. Clearly, Jollibee's ambition to diversify its portfolio and capitalize on lucrative opportunities in international markets remains undeterred. Traders eyeing Jollibee (OTC: JBFCY) may find this latest expansion a compelling development worth monitoring.
As we monitor Jollibee (OTC: JBFCY) and its future moves, it’s clear that the path from Manila to the global stage is brimming with potential, promising exciting times ahead for this fast-food behemoth.
