Jollibee Foods to acquire majority share in South Korea's Compose Coffee

Homegrown fast-food giant Jollibee Foods Corp. (JFC) on Tuesday inked definitive agreements to acquire a majority shareholding in South Korean coffee chain Compose Coffee for a total consideration of $340 million.

In a statement, JFC said it would acquire 70% in Compose Coffee Co. Ltd. and JMCF Co. Ltd., collectively called Compose Coffee, through its subsidiary Jollibee Worldwide Pte. Ltd.

Compose Coffee was ranked first in the industry for having the highest growth rate in terms of the number of franchised stores with 2,470 fully-owned franchised stores. It had over 2,600 stores as of June 2024.

Elevation Equity Partners Korea Limited, a private equity firm focusing on mid-market buyouts and growth capital opportunities in Korea and the rest of Asia, will hold 25% while Titan Dining II LP will hold the remaining 5%.

Last April, JFC committed a 90-million Singaporean dollar capital in Titan Dining II LP, equivalent to a 90% participating interest.

According to JFC, the total consideration for the acquisition is at 8x the earnings before interest, taxes, depreciation, and amortization (EBITDA) multiple on a debt-free basis and cash accretive position. Completion is subject to closing and financing conditions, and the final purchase price to be confirmed after.

"We believe that Compose Coffee is a compelling strategic fit for JFC and is on track to becoming the largest, fastest growing, and leading value coffee player in South Korea," JFC chairman Tony Tan Caktiong said.

"Together with Elevation and Titan Fund II, we look forward to working with Compose Coffee's accomplished management team to further accelerate the company's growth in existing and new markets and capture the significant whitespace in South Korea’s value coffee market," he added.

Compose Coffee and its roasting facility JMCF Co. Ltd. were founded in Busan in 2014, and was recognized as one of the most loved brands in South Korea in 2023. It also tapped V or Kim Taehyung of BTS as its brand ambassador.

JFC, which operates the brands Jollibee, Highlands Coffee, mainly in Vietnam, Coffee Bean and Tea Leaf, Milksha, Chowking, and Mang Inasal, has earmarked up to P23 billion for its capital spending this year, as it plans to open as many as 750 owned and franchised stores this year. — VDV, GMA Integrated News