The homegrown fast-food giant will acquire an additional 45% stake in the American burger chain for $100 million
MANILA, Philippines – Fast-food giant Jollibee Foods Corporation (JFC) is increasing its stake in US-based burger chain Smashburger from 40% to 85%, in line with its bid to conquer foreign markets.
JFC told the Philippine Stock Exchange (PSE) on Tuesday, February 13, that it will acquire 45% more of the US-based burger chain from Smashburger Master LLC for $100 million.
"The acquisition will increase contribution to our worldwide system-wide sales from 5% to 15%. JFC will be able to participate in the very large mainstream American consumer market in addition to serving Filipino-Americans there," Jollibee chairman Tony Tan Caktiong said.
JFC said the deal will enable it to consolidate Smashburger's operations into the company.
Once signed, the acquisition of the additional stake in Smashburger would allow JFC to increase its worldwide store network by 365 stores to 4,162.
It would also expand JFC's geographical presence from 16 countries to 21, adding Costa Rica, Egypt, El Salvador, the United Kingdom, and Panama.
"JFC believes that it will be able to profitably provide the mainstream American consumer with superior tasting products with excellent services at very good value for money as it has demonstrated in the Philippines, China, Vietnam, Singapore, Hong Kong, Brunei, and the Middle East," Tan Caktiong said.
Back in October 2015, JFC initially bought a 40% stake in Smashburger for $99 million.
JFC expects the share of its foreign business to its worldwide system-wide sales to go up to 30%, from the current 20%, once the deal is finalized in over two months.
"JFC will eventually achieve its goal of 50/50 revenue split between the Philippines and foreign businesses even as its Philippine business continues to expand strongly since its foreign business is growing even faster," Tan Caktiong said.
JFC saw its net income for 2017 jump by 15% to P7.1 billion, from P6.45 billion recorded in 2016, on higher revenues and aggressive rollout of stores.
In 2017, the fast-food giant opened a record 465 stores, ending the year with 3,797 stores worldwide.