Jollibee Foods Expands Global Presence with Major Stake in South Korea's Compose Coffee

Jollibee Foods, the largest fast-food chain in the Philippines, has announced a significant acquisition in its continued global expansion strategy. The company will acquire a majority stake in South Korea's Compose Coffee in a deal that values the coffee chain at $340 million. This acquisition marks Jollibee's largest by number of stores and will further bolster its presence overseas, where the company anticipates the majority of its future branches will be located.

The transaction involves Jollibee Worldwide Pte, a subsidiary of Jollibee Foods, purchasing 70% of privately held Compose Coffee for $238 million. Additionally, Jollibee's majority-owned Titan Fund will acquire a 5% stake. The remaining 25% will be retained by the private equity firm Elevation, according to a statement released by Jollibee.

On Tuesday, shares in Jollibee, which boasts a market value of $4.29 billion, saw a 0.44% increase. This performance outpaced the broader Philippine Stock Exchange index, which declined by 0.62%. Juan Paolo Colet, managing director at investment bank China Bank Capital in Manila, commented on the acquisition, describing it as "a good move by Jollibee to further expand its global footprint and take advantage of attractive opportunities in promising markets." He added that the acquisition is expected to be cash accretive, thereby enhancing shareholder value in the long term.

Compose Coffee, established in Busan in 2014, operates 2,470 stores, all of which are franchised. This business model has resulted in a debt-free balance sheet and strong cash returns with solid profit margins. The acquisition will increase Jollibee's global store network to an impressive 10,000 locations.

The investment grants Jollibee entry into the South Korean market, which ranks third globally in terms of coffee consumption per capita. Compose Coffee's existing operations and roasting facility are well-positioned to capitalize on this high demand, providing a strategic advantage for Jollibee.

Known for its unique sweet-style spaghetti, burgers, and fried chicken, Jollibee has established dominance in the Philippines, consistently outselling rivals like McDonald's and Yum Brands' KFC. This new venture follows Jollibee's 2019 acquisition of the loss-making Coffee Bean & Tea Leaf for $100 million, underscoring the company's commitment to expanding its footprint in the global coffee market.

Jollibee's strategic expansion into South Korea aligns with its broader vision of increasing its international presence. The company's robust growth plan involves leveraging its diverse portfolio and strong brand identity to tap into new markets and consumer bases.

The acquisition not only enhances Jollibee's market reach but also strengthens its position in the competitive coffee industry. The move is seen as a significant step in Jollibee's journey towards becoming a global powerhouse in the food and beverage sector.

With 1 USD currently equivalent to 58.79 Philippine pesos, the financial dynamics of this deal reflect a substantial investment in Jollibee's global expansion efforts. The company remains focused on maximizing shareholder value through strategic acquisitions and organic growth, ensuring that it remains at the forefront of the fast-food and coffee industries worldwide.