Report: Philippine’s Jollibee to acquire 70pc stake in Korea’s Compose Coffee

Malay Mail

Manila, July 2 — Jollibee is continuing its global expansion. Today, Esquire Philippines reported that the country’s largest food company, and one of the largest in Asia, will purchase a majority interest in the South Korean coffee chain Compose Coffee.

In a disclosure to the Philippine Stock Exchange, Jollibee Foods Corp’s (JFC) wholly owned subsidiary, Jollibee Worldwide Pte Ltd (JWPL), announced it will acquire 70 per cent of Compose Coffee. The remaining 30 per cent will be divided between Titan Dining Partners II Ltd (Titan Fund II) and Elevation Equity Partners Korea Limited (Elevation), with five per cent and 25 per cent effective shareholdings, respectively.

Esquire Philippines reported that the total consideration for the acquisition is approximately US$340 million.

According to the report, JFC had said that Compose Coffee has a debt-free balance sheet, superior cash returns and excellent profitability margins, evidenced by its high double-digit Earnings before Interests, Taxes and Depreciation and Amortisation (EBITDA) and EBIT margins due to its capital-light, 100 per cent franchised business model.

“Compose Coffee will be consolidated into JFC’s financial statements immediately upon completion of the acquisition, with an estimated uplift of plus two per cent in revenues bringing the international business’ contribution to 41 per cent of Global Revenues, plus 12 per cent in EBIT in 2024 and plus 34 per cent in store count (2,600+ stores).

“Compose Coffee will be JFC’s biggest brand in terms of number of stores. It will bring JFC’s store network closer to 10,000 stores, more than 66 per cent of which will be outside the Philippines,”” the company was quoted saying.

As of the end of 2023, Compose Coffee ranks as South Korea’s third-largest coffee chain, boasting approximately 2,500 stores by March 2024. The leading chains are Ediya, with around 3,000 locations, and Mega, with 2,709 outlets.

Compose Coffee, established in Busan in 2014 along with its roasting facility JMCF Co Ltd, stands out as a prominent franchise in South Korea’s rapidly expanding value coffee sector. It offers a diverse range of coffee and non-coffee beverages, along with various food items.

“This acquisition is aligned with JFC’s commitment to Coffee and Tea Segment and franchising initiatives,” the company said.

JFC already owns 100 per cent of American coffee chain Coffee Bean & Tea Leaf, which it purchased in 2019. JFC also owns Highlands Coffee and Coffee Man Coffee Roasters, among many other brands.