HOMEGROWN fast-food giant Jollibee Foods Corp. (JFC) said Wednesday it was buying out the remaining interest held by a partner in its China supplier, Happy Bee Foods Processing Pte. Ltd., through an equity share and asset swap agreement.
In a disclosure to the Philippine Stock Exchange (PSE), JFC said the company, through its wholly owned subsidiary Jollibee Worldwide Pte. Ltd., (JWPL) had entered into an agreement with Hua Xia Harvest Holding Pte. Ltd (Hua Xia) to acquire the latter’s 30-percent stake in Happy Bee Foods.
The transaction will result in JWPL owning 100 percent ownership of Happy Bee.
Hua Xia owns 30 percent while JWPL holds 70 percent of the registered capital of Happy Bee, full owner of Happy Bee Foods Processing (Anhui) Co., Ltd., a wholly foreign-owned enterprise organized in China.
Under the terms of its agreement, Hua Xia shall sell and convey to JWPL its 30 percent equity interest in Happy Bee, while Happy Bee (Anhui) shall sell and convey to Hua Xia’s nominee entity the assets and contracts related to the third party supply business.
The fast-food giant, through its subsidiary, will acquire the 30 percent share of Happy Bee for about $10.4 million in the form an equity share and asset swap related to the production of food products intended for institutions outside of JFC brands in China.
“JFC will not have a net cash outlay for the acquisition of the 30 percent share,” the company said.
“The transfer of shares and assets shall be subject to appropriate governmental and regulatory approvals, which are expected to be completed within 2016,” it added.
Happy Bee Anhui operates a manufacturing facility in Anhui, China that services the requirements of JFC’s Yonghe King business and produces and sells food products for business institutions other than JFC’s brands.
“The objectives of the acquisition of the 30 percent ownership of Happy Bee . . . are for JFC to concentrate on supporting the growth of its Yonghe King business and further improving its food quality and increasing assurance on food safety,” JFC explained.
JFC said the acquisition would likewise pave the way for its Yonghe King business to accelerate its store network growth in China.
Yonghe King is JFC’s largest business in China, comprising of 321 stores and contributing 10 percent of its system-wide sales worldwide. Conversely, Happy Bee Anhui produces the food products sold at Yonghe King stores.