Just now, the homegrown fast-food brand we’ve known since we were a child, Jollibee Foods Corporation (JFC) acquired one of the most popular coffee shops here in the country—the Coffee Bean & Tea Leaf (CBTL). It is considered as one of the biggest multinational acquisition with a $350 Million deal to take over the American coffee shop brand. You’ve read it right—the total consideration was $350 million, debt-free basis. The company disclosed that the total investment is estimated at $100 million. This news put excitement on the faces of existing and new investors of JFC. Despite the firm’s trade performance for the past months, there’s something great about JFC that will surely pull back investors.
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Since the consideration will not be paid in cash, Jollibee plans to finance the acquisition through Jollibee Worldwide Pte. Ltd, its Singapore-based subsidiary. The subsidiary will then get a bridge loan in order to pay for the price. 80% of the $100 million investment mentioned above is part of the equity of the holding company. The balance of $250 million will be advances to the new holding firm. After six to nine months, the holding company will issue at least $250 million worth of shares in order to pay for the advances made by Jollibee. As an investor, one thing you should learn is how the company you are investing in is going to pay for the debt that will be used for the acquisition process. And as for Jollibee, this is what they are going to do.
Jollibee will have consolidated financial statements including the Los Angles based CBTL. The new brand will be incorporated into the report of the company upon acquisition. For the company, the acquisition of this famous coffee shop is considered as its largest and most multinational among its businesses in 27 countries. I have been a long term fan of Jollibee and this is just historic. This is a proof that a local company us becoming a multinational player. JFC closes the day at 251 on news based selling. Noted as well that the negative side of this transaction is that Coffee Bean has lost money in the past 2 years of operation.
The acquisition of CBTL will add 14% to the global system-wide sales of JFC. 26% will be added to its total store network and a 36% increase will go to worldwide sales. Overall, this transaction will bring JFC near to its vision to be one of the top five restaurants in the whole world when it comes to market capitalization. Together with Highlands Coffee and its business mostly active in Vietnam, JFC will have a very important role in the large and quickly growing industry of coffee business. After the Jollibee brand, CBTL will be JFC’s second-largest brand.