Trade the News: Jollibee acquires South Korea’s Compose Coffee for $340 million – FREE Report!

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Earlier this month, Jollibee Foods Corp. (JFC) announced the acquisition of South Korean coffee chain Compose Coffee for $340 million in a bid to bolster JFC’s coffee and tea business. The company expects to complete the acquisition by the first half of August and expects achieving payback on the acquisition “within five to six years”.

JFC’s wholly owned subsidiary, Jollibee Worldwide Pte. Ltd. (JWPL) will acquire majority shareholding of effectively 70% in Compose Coffee, while the remaining shareholdings will be held by Titan Dining II LP (~5% equity) and Elevation Equity Partners Korea Limited (~25% equity).

JFC’s Chief Financial Officer Richard Shin said in an interview that the company expects payback on its acquisition of Compose Coffee “within five to six years”.

Mr. Shin clarified that Compose Coffee will not compete with JFC’s other existing coffee brands, such as The Coffee Bean & Tea Leaf (CBTL), as the latter caters to the premium segment while the former serves the value segment.

“We don’t see it as competition. We actually see it as better synergy and a better portfolio play for us with coffee in South Korea because we now have the value segment, which we don’t have any brands in, and the well-established CBTL,” he said.

Compose Coffee had 2,612 stores in South Korea as of June 2024 and is ranked second in the value coffee segment industry in terms of total number of franchisees, with over 1,900 franchise stores by the end of 2022.

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