Jollibee Foods acquires majority of Compose Coffee for $238 million

Industry

Published: 03 Jul. 2024, 17:30 Updated: 03 Jul. 2024, 20:12

Jollibee Foods acquires majority of Compose Coffee for $238 million

Philippine fast food giant Jollibee Foods will become the majority stakeholder for Korean budget coffee chain Compose Coffee as part of its expansion into the global coffee market. [JOLLIBEE FOODS, COMPOSE COFFEE]

Philippine fast food giant Jollibee Foods will acquire a controlling stake in Korea's Compose Coffee for $238 million, as part of a deal valuing the budget beverage chain at $340 million.

Jollibee subsidiary Jollibee Worldwide Pte will buy 70 percent of the privately owned Compose Coffee’s shares, the Manila-based company said in a statement on Tuesday. Titan Fund, Jollibee Foods’ investment unit, will hold 5 percent and private equity firm Elevation Equity Partners Korea will acquire 25 percent.

Founded in Busan in 2014, Compose Coffee is the fourth largest coffee franchise by number of outlets in Korea behind Ediya Coffee, Paris Baguette and Mega Coffee. Its first international store, which opened in Singapore in July 2023, is the franchise’s only overseas shop as of yet.

Jollibee Foods said Compose Coffee will be a “gateway to unlocking the fast-growing international value coffee market in South Korea,” in a filing to the Philippine Stock Exchange.

The investment gives the Philippine company access to Korea, which ranks third globally by coffee consumption per capita, according to Jollibee Foods. The Korea Customs Service valued the nation's coffee market at an estimated 11.74 trillion won in 2017.

Boy band BTS member and singer V as Compose Coffee's brand model [COMPOSE COFFEE]

Compose Coffee has more than 2,400 stores in Korea, which are all franchised — contributing to the company's debt-free balance sheet, strong cash returns and profit margins, Jollibee Foods said in a statement. The company plans to increase its number of global stores to 10,000 under the deal.

Jollibee Foods forecast that the Korean coffee brand would add 2 percent to its revenue and 12 percent to its adjusted earnings before interest, taxes, depreciation and amortization this year.

The Compose Coffee acquisition is part of Jollibee’s ongoing expansion in the global coffee market. In 2019, the firm invested $100 million to become the majority stakeholder in The Coffee Bean & Tea Leaf, as part of a $350 million deal, and acquired a controlling stake in Vietnam's Highlands Coffee in 2017 after having taken a 50 percent share in 2012.

BY KIM JU-YEON [kim.juyeon2@joongang.co.kr]