Jollibee completes purchase of Chinese fastfood chain for P2.5 B

Fastfood giant Jollibee Foods Corp. (JFC) has completed the purchase of 100 percent of Chinese fastfood chain Hongzhuangyuan following the approval by the Ministry of Commerce of the People’s Republic of China.

In a disclosure to the Philippine Stock Exchange, JFC said the acquisition was valued at 379 million renminbi (approximately P2.5 billion), consistent with the terms of the final agreement signed on Aug. 23.

Of the amount, 246.4 million renminbi was paid to the sellers as the initial payment while the remaining 132.6 million renminbi is to be paid within the next 12 months.

The fund for the acquisition of Hongzhuangyuan will come from the $100 million loan package obtained by JFC from various local lenders to fund its expansion in China. It was the Jollibee Group’s first domestic borrowing in seven years.

Hongzhuangyuan, which offers a variety of local Chinese food centered around congee, is the third Chinese fastfood brand acquired by the Jollibee Group after restaurant chain Yonghe King and tea house Chun Shui Tang.

Beijing-based Hongzhuangyuan operates a total of 38 restaurants of which 31 are company-owned, all located in Beijing, and seven are franchised stores situated in other cities in China. It has since added five more company-owned restaurants from the time of the initial agreement in September 2007.

JFC chairman and chief executive officer Tony Tan Caktiong said the latest acquisition is in line with the group’s strategy to continue building its businesses abroad and expanding its presence in China. 

“We are encouraged by our continued progress in foreign businesses including Yonghe King in China. Hongzhuangyuan will be a strong addition to our presence in China in terms of market segment and geographical coverage,” Tan Caktiong earlier said. 

The Jollibee Group operates the largest food service network in the Philippines with 1,480 stores as of end-August 2008. Its anchor Jollibee chain has 636; outlets Chowking, 377; Greenwich, 231; Red Ribbon, 204; Delifrance, 27 and Manong Pepe, five.