Jollibee selldown pulls stock index lower

MANILA, Philippines — The benchmark Philippine Stock Exchange index retreated back to the 8,100 level yesterday after market investors dropped their Jollibee Food Corp. shares after the Asian food giant announced that it had acquired California-based The Coffee Bean  & Tea Leaf.

The PSEi tumbled by 89.97 points, or 1.09 percent, to close at 8,161.49 while the broader All Shares index slumped to 4,956.24, down 34.71 points or 0.70 percent.

All the other indices were down as well except for the services gauge.

Total value turnover reached P6.438 billion. Market breadth was negative, 125 to 73 while 57 issues were left unchanged.

JFC lost 7.99 percent to finish at P251 after announcing that it has acquired The Coffee Bean & Tea Leaf, a California-based coffee and tea shop giant which is JFC’s biggest acquisition so far.

JFC will acquire CBTL for $350 million with an initial investment of $100 million. Through its wholly owned subsidiary Jollibee Worldwide Pte Ltd (JWPL, Singapore), it has entered into an agreement to invest $100 million in a new Singapore-based holding company to acquire 100 percent of CBTL.

Analysts said it is one of JFC’s most ambitious acquisitions so far.

“Investors also reacted to the latest move of index heavyweight Jollibee. Looking into JFC’s acquisition of CBTL, JFC will take on one of its most ambitious acquisition maneuvers as of date by acquiring CBTL for a total of $350 million. Looking at the audited financials it provided, CTBL has had a lackluster two years, recording $21.04 million in losses last year amid a meager revenue growth of only 4.11 percent year on year. Even though it usually takes around three years for JFC to turn its acquired businesses around, it does add challenge considering that the firm is still in the midst of rationalizing Smashburger’s operations. Lastly, to make way for CBTL’s acquisition, Highlands Coffee’s planned July 2019 IPO has been pushed back,” said Luis Limlingan of Regina Capital.