Jollibee acquires 40% stake in US-based Smashburger chain

Photo via smashburger.com

via rappler.com – Fastfood giant Jollibee Foods Corporation (JFC) acquires Denver, Colorado-based Smashburger, a quick service restaurant chain, for a substantial stake nearly worth $99 million.

JFC, in a disclosure to the stock exchange Tuesday, October 13, said its wholly-owned subsidiary Bee Good! Incorporated (BGI), entered into an agreement with Smashburger Master LLC (“Master”) to acquire 40% of SJBF LLC (SJBF). SJBF (through various subsidiaries) owns, operates, and franchises Smashburger.

BGI will pay Master approximately $99 million for 40% of SJBF. The purchase price shall be paid in cash at closing. The purchase price is also based on a $335 million enterprise value and a $248 million equity value.

“BGI’s purchase of 40% of SJBF is expected to be completed within 2015, subject to the fulfillment of certain conditions, including due performance by Master of its obligations under the agreement, continued accuracy of representations and warranties, and the procurement of consents from third parties relevant to the Smashburger business,” JFC said.

With headquarters in Denver, Colorado, Smashburger has 339 restaurants worldwide in 35 states in the US and in 7 foreign markets.

Bigger bite

BGI’s purchase of 40% of SJBF is expected to be completed within 2015, subject to the fulfillment of certain conditions, including due performance by Master of its obligations under the agreement, continued accuracy of representations and warranties, and the procurement of consents from third parties relevant to the Smashburger business.

Smashburger estimates system wide sales of approximately $339 million in 2015, an amount equivalent to 12% of JFC’s estimated worldwide system wide sales for the same year.

“Smashburger’s system wide sales have been growing at an annual rate of approximately 30% between 2011 and 2015 while its store network has been increasing annually by approximately 20%,”JFC said.

It added that JFC’s wholly-owned subsidiary, BGI, has a mechanism in the agreement with Master to purchase up to an additional 35% of Smashburger between 2018 and 2021 and the balance of 25% between 2019 at the earliest and 2026 at the latest.

“The purchase price for the remaining 60% will be based on the achievement of certain financial performance targets agreed between BGI and Master,” JFC said.

JFC said the acquisition will make its presence in the US more significant, “going beyond the Filipino market and serving mainstream consumers in the US$100 billion burger market, a food segment which is estimated to be almost 3 times larger than the pizza, sandwich or coffee segment in terms of sales.”

It added that the acquisition will make the US one of JFC’s most important markets and drivers of long-term growth along with the Philippines, China, and the Filipino markets abroad.

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