Fastfood giant Jollibee Foods Corp. (JFC) has sealed a deal to acquire 100 percent of Hongzhuangyuan, a chain of restaurants located mostly in Beijing, China, for $55.5 million (P2.5 billion).
In a disclosure yesterday to the Philippine Stock Exchange, JFC said the transfer of its ownership to JFC wholly-owned unit Jollibee Worldwide Pte. Ltd. will likely take place in October, subject to the approval of China’s Ministry of Commerce.
The finalization of the deal follows the due diligence review conducted for JFC by PricewaterhouseCoopers while the legal due diligence was performed by Jun He Law, both reputable international firms with significant practices in Beijing.
“Under the terms of the final agreement, no payment is to be paid until the completion of the purchase which is subject to the approval by the Chinese government. Since the time of the initial agreement, JFC had conducted additional due diligence while Hongzhuangyuan had performed to meet certain key conditions for the acquisition,” JFC said.
JFC said funding for the purchase will come from internally-generated cash.
Hongzhuangyuan operates a total of 37 restaurants, 31 of which are company-owned, all located in Beijing, and six are franchised stores situated in other cities in China. It has added five company-owned restaurants since the initial agreement was signed in September 2007.
JFC pointed out that the Hongzhuangyuan business, which serves mainly congee dishes, “is quite profitable and has no debt.” The company is eyeing sales of $28.9 million or P1.3 billion this year.
The Jolibee Group is the largest restaurant network in the Philippines with operating stores 1,689 worldwide. Of the total, 1,480 are located in the Philippines while the remaining 209 stores are based overseas.
JFC chairman and chief executive officer Tony Tan Caktiong said the acquisition is in line with the group’s strategy to continue building its businesses abroad and expanding its presence in China. JFC also owns the Yonghe King restaurant chain, a fastfood-style business based in Shanghai.
“We are encouraged by our continued progress in foreign businesses including Yonghe King in China. Hongzhuangyuan will be a strong addition to our presence in China in terms of market segment and geographical coverage,” Tan Caktiong earlier said.
Tan Caktiong said Hongzhuangyuan offers a variety of local Chinese food centered around congee.
He said JFC, however, will continue to strengthen and defend the leadership positions of its brands in the Philippines, which remains its most important market.
Just recently, JFC signed an agreement to acquire a 12 percent stake in US-based Chow Fun Holdings LLC, which owns a casual dining restaurant serving pan-Asian food, for $950,000 (roughly P42.75 million).
Chow Fun’s Jinja Bar and Bistro serves Southeast Asian cuisines featuring favorite dishes from Japan, China, Thailand, Vietnam, Malaysia and Singapore. It has two outlets in New Mexico, one in Sta. Fe and another in Albuquerque.