(Businessworld Online)
“We are encouraged by our continued progress in our 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,” a disclosure to the stock exchage quoted Jollibee Chairman, President and Chief Executive Officer Tony Tan Caktiong as saying.
Hongzhuangyuan consists of 26 company-owned stores all located in Beijing and seven franchised stores in other cities, the statement read.
“The brand has a unique concept, consisting of serving a variety of local Chinese food centered around congee. The product offerings at their price points provide superior value, thus attracting a high number of customers at different parts of the day. We believe that this restaurant chain has the potential for broad acceptance across China,” Mr. Tan Caktiong said of the Chinese food chain.
The disclosure also quoted Jollibee Chief Finance Officer Ysmael V. Baysa as saying that the acquisition will cost the company an estimated $50.5 million, noting that Jollibee’s latest foreign acquisition has a track record of profitability and has no debt. He added that the acquisition will be financed with existing funds.
Jollibee’s acquisition may take several more months to complete and is subject to fulfillment of conditions stated by the entrepreneurs who are selling the business, the statement read further. Over the past four years, Jollibee has been acquiring new businesses and shares in existing business ventures.
In May last year, Jollibee opened Chun Shui Tang (Spring Water Teahouse), which caters to those working in the Shanghai metropolitan center. Jollibee bought the high-end teahouse for $350,000.
And just last June, Jollibee bought the remaining 15% stake of Yonghe King fast food chain for $6 million, three years after it acquired 85% for $11.5 million.
Jollibee now operates 1,559 stores worldwide — it has 12 stores in the USA alone, and also operates in Brunei, Hong Kong, Saipan and Vietnam.
Besides it hamburger chain, Jollibee has three subsidiaries, namely: Greenwich Pizza and Chowking Food Corp. which it bought in 1994 and 2000, respectively, as well as the local franchise of Delifrance which it acquired in 1995. — **
Well, not only do we dominate the world with OFWs, we do it with Acquistions as well =)
Assuming Jollibee did their due diligence well before this acquistion, I think expanding overseas is a good way to futher increase the value of the corporation. They probably think the local market is saturated already and to increase revenues, one way to do it is to tap the international market.
I’m not so sure how investors in Jollibee reacted to it. I think the share price remained stable. But stock wise, Jollibee is a solid buy with strong fundamentals. I’m lazy to do all those financial analysis on them since I believe in the efficient market hypothesis. lol. half joke. Just basing on this, if they manage their overseas acquisitions well, i think the share price will reflect that in the long run.
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