Jollibee completes purchase of stake in US burger chain

MANILA, Philippines - Filipino-owned fastfood giant Jollibee Foods Corp. completed its acquisition of a 40-percent stake in US-based casual burger brand Smashburger in a deal valued at $99.5 million.

JFC will fund the acquisition with a 10-year loan from Metropolitan Bank and Trust Co. and its cash reserves.

 Under the deal, JFC, through its wholly-owned unit Bee Good Inc., has the option to purchase an additional 35 percent of Smashburger from 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 by the parties, JFC said in a disclosure to the Philippine Stock Exchange yesterday.

The move would enable the local burger giant to penetrate further the $100 billion US burger market, JFC chairman Tony Tan Caktiong said.

 Smashburger serves fresh 100 percent certified Angus beef burgers.

Headquartered in Denver, Colorado, Smashburger currently has 339 restaurants with sales of approximately $339 million for 2015, equivalent to 12 percent of JFC’s estimated worldwide system-wide sales for the same year.

 Smashburger’s system wide sales have been growing at an annual rate of about 30 percent from 2011 to 2015 while its store network has been increasing annually by 20 percent.

Tan Caktiong said the acquisition would make the US one of the company’s major driver of long-term growth along with other markets such as the Philippines and China.

Smashburger chairman and founder Rick Schaden said the company is excited to partner with the Filipino giant.

JFC tapped J.P. Morgan as financial advisor, Pillsbury Winthrop Shaw Pittman LLP as legal advisor and Isla Lipana & Co. as accounting and tax advisor for the transaction.

 At present, JFC owns and operates 87 restaurants in the United States, consisting of 32 Jollibee outlets, 33 Red Ribbon stores, 19 Chowking outlets and three Jinja branches. System-wide sales in the US account for five percent of JFC’s worldwide sales.

 In the Philippines it has 2,384 outlets as of the end of August. It also has 629 stores abroad with 415 in China, 127 in Southeast Asia and the Middle East as well as 87 branches in the US.

In terms of joint venture deals, JFC has 50 percent interest in Highlands Coffee (Vietnam, Philippines) 85 branches; Pho 24 (Vietnam, Indonesia, Cambodia and Korea) 39 and 12 Sabu in China with 20 outlets.