Jollibee to pay P1.8-B for Red Ribbon

Jollibee Foods Corp., the country’s largest fastfood chain, is paying P1.8 billion ($32.3 million) to acquire 100 percent of Red Ribbon Bakeshop, a 26-year old business that operates 147 branches nationwide and in the United States.

In a disclosure to the Philippine Stock Exchange, Jollibee said it has sealed a deal with RRB Holdings Inc., the owner of Red Ribbon Bakeshop.

Based on the terms and conditions of the purchase agreement, Jollibee will acquire 1.58 million RRB Holdings shares each with a par value of P100. The company will make an initial payment of P1.3 billion once the closing conditions of the purchase agreement are fulfilled. The remaining balance of P500 million will be paid in three equal installments over the next three years following the closing date of the purchase pact.

The Red Ribbon Bakeshop, which started out in 1979, has 131 stores in the Philippines and 16 in California – earning revenues of P2.5 billion in the year to June 2005. Its net profit for the period was P100.2 million while total assets reached P756.2 million.

It is known for its affordable but good quality cakes and pastries. It also serves popular Filipino dishes and confectionaries.

The acquisition is expected to boost Jollibee’s annual revenues by P2.5 billion and complement the fastfood industry it currently serves.

Jollibee registered revenues of P 26.2 billion or $468 million last year as it continued to expand its foreign operations.

"We have opportunities to grow Red Ribbon by increasing its penetration rate among households in the Philippines and through marketing initiatives and by expanding its store network in the United States," Jollibee chairman and chief executive officer Tony Tan Caktiong said.

Jollibee operates 1,200 stores in nine countries, including Oriental fastfood chain Chowking, pizza parlor Greenwich, sandwich chain Delifrance, and its Yonghe King chain in China.

With the acquisition of Red Ribbon, the Jollibee Group will raise its total stores in the United States to 34 from 18 through the acquisition.

As of end-June, Jollibee had 508 Jollibee hamburger restaurants, 310 Chowking stores, 228 Greenwich pizza/pasta restaurants, and 33 Delifrance stores, as well as 121 stores abroad, which includes 88 Yonghe King stores in China.