Jollibee buys 40% of US burger chain for $99m
Restaurant operator Jollibee Foods Corp. said Tuesday a unit will acquire a 40-percent stake in US-based burger chain Smashburger for $99 million, making it Jollibee’s largest acquisition overseas.
The acquisition will expand Jollibee’s presence to the US mainstream consumer market, aside from migrant Filipinos who currently patronize Jollibee, Chowking and Red Ribbon outlets in the US.
Jollibee said in a disclosure to the stock exchange wholly-owned unit Bee Good! Inc. signed an agreement with Smashburger Master LLC to acquire 40 percent of Smashburger.
The agreement also gives Jollibee an option to increase its holdings in Smashburger. The transaction is expected to be completed this year.
“Smashburger is one of the fastest growing restaurant brands in the United States and we are very excited to work side by side with the owners and management of Smashburger as we continue its growth,” Jollibee chairman Tony Tan Caktiong said.
“This acquisition will make JFC’s presence in the US, more significant, going beyond the Filipino market and service mainstream consumers in the $100-billion US burger market, a food segment which is estimated to be almost three times larger than the pizza sandwich or coffee segment in terms of sales,” Tan Caktiong said.
The deal represents Jollibee’s largest acquisition to date.
Smashburger, with headquarters in Denver, Colorado, currently has 339 restaurants, including 184 company-owned and 115 franchised outlets in 35 states in the US and seven other countriesd.
Smashburger’s systemwide sales grew at an annual rate of30 percent between 2001 and 2015 while its network expanded annually by 20 percent. System-wide sales are expected to reach $339 million this year.
Under the terms of its agreement, Bee Good! has an option purchase up to an additional 35 percent of Smashburger between 2018 to 2021 and the balance of 25 percent between 2019 and 2026.
The purchase price for the remaining 60 percent will be based on the achievement of certain financial performance targets agreed between BGI and Master.
Jollibee currently owns and operates 87 restaurants in the US, including 32 Jollibee outlets, 33 Red Ribbon stores, 19 Chowking branches and 3 Jinja stores. System-wide sales in the US account for 5 percent of JFC’s global sales.
Jollibee has 2,384 restaurants in the Philippines and 629 outlets overseas.
It also has 50-percent interest in joint ventures Highlands Coffee (Vietnam, Philippines), Pho24 (Vietnam, Indonesia, Cambodia and Korea) and 12 Sabu (China).