Jollibee Foods Corp. (JFC) has completed its $99-million acquisition of 40 percent stake in US-based burger chain Smashburger.
“Further to its October 13, 2015 disclosure, JFC disclosed today that [its]wholly-owned subsidiary, Bee Good! Inc. (BGI) has completed its acquisition from Smashburger Master LLC (Master) of 40 percent of the outstanding units of SJBF LLC, the parent company of the entities comprising the Smashburger business,” the company said in a disclosure.
The purchase was aimed at growing Jollibee’s footprint in the US.
“Smashburger is one of the fastest-growing restaurant brands in the US. This acquisition will make JFC’s presence in the US more significant, going beyond the Filipino market and serving mainstream consumers in the $100-billion 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,” JFC said.
Under the agreement, BGI has the option to purchase up to a 35 percent additional stake in SJBF from 2018 to 2021, and the balance of 25 percent may be acquired between 2019 and 2026.
“This acquisition will make the US one of JFC’s most important markets and drivers of long term growth along with the Philippines, China and the Filipino markets abroad,” it added.
BGI is JFC’s wholly-owned subsidiary through its offshore investment unit Jollibee Worldwide Pte Ltd., which is based in Singapore.
SJBF is classified as a Delaware limited liability company, which has a different form of capital structure from a regular firm. Equity interests of an LLC are referred to as “membership interests” and in the case of SJBF, “Class A Units” are equivalent to common stock.
The US-based burger chain is valued at $335 million, while its equity value is $248 million.
SJBF operates and franchises Smashburger restaurants specializing in burger meals. With headquarters in Denver, Colorado, there are 339 Smashburger restaurants globally in 35 US states and in seven foreign markets.
For 2015, Smashburger expects systemwide sales to reach $339 million, which is about 12 percent of JFC’s estimated worldwide systemwide sales for the same year.
JFC’s global expansion is in line with a five-year plan to grow its net income and revenues by double digits, with the aim of becoming one of the world’s top five quick service restaurants (QSR). At present, JFC said it was the 10th largest QSR in the world based on Bloomberg data.
The firm’s capital expenditures this year were set at P9.1 billion, 68.5 percent higher compared to the previoust year. Of this, P6.7 billion will go to expansion and operations in the Philippines, P1.7 billion for China and the rest will go to the United States, Southeast Asia and the Middle East stores.
In the first six months of 2015, JFC grew its net income by 7.2 percent to P2.7 billion.
The company has said that it was “on track” to open at least 300 stores worldwide this year, 200 in the Philippines and 100 abroad — mostly in China. As of end-June, JFC was already operating 3,001 stores – 2,374 in the Philippines and 627 abroad.
Some of the company’s brands include the flagship Jollibee as well as Chowking, Greenwich, Red Ribbon, Mang Inasal, and Burger King.