Fried chicken to crayfish wraps: Philippines’ Jollibee eyes deals to grow

Visual from Philippine Retailers Association

Filipino billionaire Tony Tan Caktiong, who has built Jollibee Foods Corp into a near-4,000 store purveyor of sweet-style spaghetti, burgers and fried chicken, is looking to buy existing brands in mature markets to help fuel future growth.

Dominant at home, where Jollibee has 1,000 eponymous stores welcoming diners with its smiling bee logo, Tan now wants to reshape the $5 billion group as a global fast-food company, bankers and fund managers say.

Primary targets include the United States and China, where it already has joint ventures, including Dunkin’ Donuts .

Tan, 64, said at a company event in July that half of Jollibee‘s total sales would come from overseas stores in the next five years. Currently, foreign stores including joint ventures account for 30 percent of sales.

This week, people familiar with the matter said Jollibee was considering bidding for Pret A Manger, a UK-based chain selling organic coffee and wholesome sandwiches to office workers. It is still working out a valuation and has not yet decided to bid, the people said.

Jollibee has to keep chasing growth. They own pretty much every large chain in their home market,” said a regional banker who has dealt with the company. “They are definitely not shy when it comes to looking at mature markets.”

Ysmael Baysa, Jollibee‘s chief finance officer, told Reuters this week that buying new businesses “has always been part of our growth strategy.”

Tan started out with two ice cream parlours in the 1970s, and expanded Jollibee rapidly into a fast food chain dubbed “the McDonald’s of the Philippines”. Forbes ranks him as the country’s eighth-wealthiest man.

“They see where they could utilise the knowledge and synergies they have,” said Robert Ramos at Unionbank, who helps manage $795 million in funds and holds Jollibee stock. “They are increasing the revenue stream beyond the businesses they have now… They are choosing businesses in line with their core competence.”

As discretionary incomes have grown in Asia, the region has become the second-largest fast food market globally after North America.

Jollibee has created new domestic brands and has tie-ups with foreign chains. It bought a stake in Highlands Coffee, which outsells Starbucks in Vietnam, and opened its own outlets in Saudi Arabia and the United States.

“PREMIUM CREDIT”

Jollibee‘s interest in Pret A Manger – which owner Bridgepoint is said to be preparing for a U.S. listing this year – comes just two years after Tan paid around $100 million for a 40 percent stake in U.S.-based chain Smashburger, his biggest overseas deal to date.

“If Jollibee wanted to do a $1 billion acquisition, it will have access to capital. It’s very liquid whether overseas or onshore. Jollibee is a premium credit,” said a person close to the company, who was not authorised to speak to the media and asked not to be named.

Jollibee is very clear where they would like to grow: the Philippines, China and the U.S.”

In China, the company operates about 400 stores of various brands, including joint ventures.

While Jollibee‘s original menu is a hit at home and among the diaspora of millions of Filipinos working overseas, it’s a challenge to broaden its appeal to international diners – hence the drive to acquire global brands.

Jollibee‘s revenue has more than tripled over the past decade to 113.9 billion pesos ($2.2 billion), its net income has jumped to 6.16 billion pesos, powered by strong consumer spending in one of the world’s fastest-growing economies, and its shares trade at around 242 pesos each, up from 51.50 pesos a decade ago.

Other Philippine companies, too, have used their plentiful cash and access to bank credit to make overseas deals, such as Universal Robina Corp’s acquisition of Snackbrands Australia for $462 million last year, and Alliance Global Group’s earlier $291 million buy of Bodegas Fundador from Beam Suntory.

Reuters

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.