PE investors exit The Coffee Bean & Tea Leaf to Jollibee

Jollibee will acquire 80% through an initial investment of $100 million. The remaining $250 million will be paid via a Singaporean subsidiary called Superfoods Group, which runs the Highlands Coffee chain in Vietnam. Superfoods will hold the remaining 20% stake, using part of the capital received from its parent company to pay down Coffee Bean’s approximately $84 million of debt.

Advent, CDIB and Mirae jointly acquired a controlling stake in Coffee Bean in 2013 from the Sassoon family for an undisclosed sum, with a view to targeting increased appetite for specialty coffee products in China. The investors teamed up with Korean retail giant E-Land in 2015 with a plan to open 700 locations in China, but E-Land reportedly pulled out of the partnership last year with only 17 stores established in the country.

Coffee Bean had 1,189 outlets in 27 countries at the end of 2018, of which 447 were in Southeast Asia and another 336 in other Asian countries, including 292 in Korea and 27 in India. The company claims to use only hand-roasted coffee beans and hand-blended teas. It also sells a range of whole-bean coffees, whole-leaf teas, favored powders, and baked goods.

Tony Tan Caktiong, chairman of Jollibee, said the acquisition would add 14% to Jollibee’s global system-wide sales and 26% to its total store network. It will also establish Coffee Bean as the company’s second-largest brand after its namesake fast-food business, which has about 3,000 locations in the Philippines. Coffee Bean’s revenue came to $313 million in 2018, while net losses amounted to $21 million. 

“Combined with Highlands Coffee, this acquisition will enable Jollibee to become an important player in the large, fast-growing and profitable coffee business,” Tan Caktiong said in a statement. “Our priority is to accelerate the growth of The Coffee Bean & Tea Leaf brand, particularly in Asia, by strengthening its brand development, marketing and franchise support system.”

Jollibee is understood to be interested in increasing its exposure to China, where the fried chicken specialist will face stiff competition from entrenched rival KFC. Previous attempts to enter the country include Jollibee contributing $180 million to a partnership with RRJ Capital in 2014 that acquired a license to operate Dunkin' Donuts cafes across most of Greater China.

Shares in Jollibee fell 8% following the announcement of the Coffee Bean deal to $4.93, their lowest price since October last year. The stock was trading at $4.95 as of midday July 25.

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• Topics
• Southeast Asia
• North America
• Trade sale
• Consumer
• USA
• Philippines
• Singapore
• Advent International
• CDIB Capital
• Mirae Asset Private Equity