Jollibee Foods Corp., the Philippines’ food service company, said Tuesday its subsidiary, Jollibee Worldwide Pte. Ltd., has finalized a deal to acquire a majority stake of 70 percent in Compose Coffee Co., Ltd. and JMCF Co. Ltd., collectively known as Compose Coffee.
The controlling stake was acquired by Jollibee for USD340 million, which is 8 times the enterprise value/earning before interest, taxes, depreciation and amortization on a debt-free basis. Compose Coffee keeps a cash accretive position.
The transaction was executed at a favorable multiple compared to industry averages. Completion is subject to customary closing and financing conditions, with the final purchase price to be confirmed.The remaining 30 percent will be shared by Titan Dining II LP (Titan Fund II) and Elevation Equity Partners Korea Ltd. Titan Fund will hold 5 percent while Elevation will own 25 percent of Compose Coffee.
Elevation specializes in mid-market buyouts and growth capital in the consumer sector across Asia, while Titan Fund II focuses on strategic investments in food and beverage concepts in the Asia Pacific region.
Jollibee holds a 90 percent participating interest in Titan Fund II.
Compose Coffee is a leading player in South Korea’s coffee industry. All its 2,470 franchised stores and its own large-scale coffee roasting facility, Compose Coffee delivers high-quality specialty beans efficiently. It has achieved significant market presence with endorsements from BTS V as its brand ambassador.
Compose Coffee operates a debt-free balance sheet with robust cash returns and high profitability margins, driven by its capital-light, fully franchised business model. Upon completion, Compose Coffee will be integrated into Jollibee’s financial statements, contributing an estimated plus 2 percent in revenues and increasing international business contributions to 41 percent of global revenues, plus 12 percent in EBIT, and expanding store count to over 2,600 stores.
Jollibee Chairman Tony Tan Caktiong is confident of Compose Coffee’s growth and earnings potential and highlighted the potential synergy with Jollibee’s coffee and tea segment and franchising initiatives. He said Jollibee is committed to unlocking South Korea’s fast-growing value coffee market, which ranks third globally in coffee consumption per capita.Founded in 2014 in Busan, South Korea, Compose Coffee has rapidly grown to become a leader in the value coffee segment, recognized for its extensive menu and flagship product, the KWR1,500 Americano.
The brand’s accolades include being named South Korea’s favorite coffee shop at the 2023 Korea’s Most Loved Brand Awards.
The acquisition underscores Jollibee’s strategic intent to expand its footprint in Asia Pacific’s dynamic food and beverage landscape, leveraging Compose Coffee’s established market presence and operational strengths to drive future growth and profitability.
