JOLLIBEE Foods Corp. now officially controls US-based Smashburger after obtaining all regulatory approvals in the United States, the homegrown fast food chain said on Tuesday.
“With the completion of the acquisition, JFC shall include Smashburger in its financial consolidation starting April 17, 2018,” the company said in a disclosure.
Jollibee, through its wholly-owned subsidiary Bee Good! Inc., acquired an additional 45 percent stake in Smashburger from Smashburger Master LLC for $100 million, boosting its ownership in the burger chain to 85 percent.
Upon execution, Smashburger will contribute 15 percent to the Jollibee group’s global systemwide sales from the current 5 percent. The acquisition also increases the share of foreign businesses to total worldwide sales to 30 percent from the current 20 percent.
The consolidation of Smashburger into Jollibee will increase its worldwide store network by 365 stores to 4,162 as well as its geographical presence from 16 countries to 21, adding Costa Rica, Egypt, El Salvador, United Kingdom (England and Scotland), and Panama.
The company said it eventually expects to achieve a 50/50 revenue split target as foreign operations were growing faster than in the Philippines.
As part of a debt restructuring, Bee Good! also refinanced Smashburger’s loan obligation worth $80 million. Jollibee executed a long-term loan to implement the refinancing.
“A much lower cost long term financing, made possible by Jollibee’s strong balance sheet, will significantly improve the net income of Smashburger immediately,” Jollibee Chief Finance Officer Ysmael Baysa said.
“It will also enable Smashburger to make more meaningful investments for healthier and faster growth … We look forward to the business making positive net income contribution to Jollibee’s profit in the medium term and significant profit contribution in the long term,” he added.
As at February 2018, Jollibee’s total store network in the country stood at 2,884 outlets comprising 1,071 Jollibee branches, 529 Chowking outlets, 271 Greenwich stores, 425 Red Ribbon stores, 495 Mang Inasal outlets, and 93 Burger King stores. Overseas, the group has a total of 939 stores.