The initial payment was made after all conditions set under the sale and purchase agreement entered into by JFC and Belmont have been met.
JFC agreed on a purchase price of $22.5 million for the acquisition of 77 Yonghe King stores. The initial payment of $11.5 million came from JFC’s surplus cash and external sources.
JFC said the 85-percent stake in Belmont has been transferred to its wholly-owned unit Jollibee International (BVI) Ltd.
Under the agreement, a bonus payment will be made by JFC to the sellers within the next three years if a certain profit after tax level is achieved.
The Yonghe King restaurant, which started in 1995 in Shanghai, serves Chinese food using a Western style fast food service system.
It operates 26 stores in Shanghai, 26 in Beijing, 11 in Shenzhen, eight in Wuhan and six in Hangzhou.
JFC said the acquisition is in line with its international expansion and provides the group with an opportunity to become a major regional player in the quick-service restaurant business in Asia.
Belmont, however, will retain ownership of 15 percent of Yonghe King. In 2003, total sales of the Yonghe Group reached about US$ 24 million.
JFC officials expect the Yonghe King fastfood business to add about five percent to the Jollibee group’s system-wide sales.
The Jollibee group operates the Philippines’ largest fast-food network. It has a total of 988 stores worldwide as of end 2003 467 Jollibee, 245 Chowking, 213 Greenwich, 30 Delifrance and 33 stores abroad.
With the acquisition of Yonghe King, the JOllibee Group’s total number of stores will increase to 1,065.
It currently operates stores in the US, Hong Kong, Brunei, Indonesia and a few other countries.