Jollibee Foods Corp. · PSE:JFC
Jollibee Foods — Merger or Acquisition (July 2024)
27 slides from Jollibee Foods's merger presentation, Jul 9, 2024
Slide 1: Briefing on Compose Coffee's Planned Acquisition
Jollibee Foods Corporation Briefing on Compose Coffee's Planned Acquisition July 9, 2024
Slide 2: Copyright notice
Copyright © 2024 by KR & Partners. All rights reserved.
Slide 3: Executive Summary (1/2)
Executive Summary (1/2) July 2, 2024 - JFC signed definitive agreements to acquire majority shareholding of effectively 70% in “Compose Coffee Co., Ltd.” and “JMCF Co. Ltd.” collectively called “Compose Coffee”. The remaining shareholdings shall be held by Titan Dining Investment Pte Ltd. (a subsidi
Slide 4: Executive Summary (2/2)
Executive Summary (2/2) The total consideration for the acquisition is approximately KRW470 billion (circa USD340 million) at ~8x EV/EBITDA trailing (2023) multiple on debt-free basis and cash accretive position (~KRW 70 billion Cash) closed at a favorable transaction multiple compared to average EV
Slide 5: Compose Coffee – Summary on a Page
Compose Coffee – Summary on a Page Business Overview Financial Performance Target operates a coffee franchise, offering high-quality coffee at a value price point Ranks 2nd in the value coffee segment industry in terms of the total number of franchisees, with the number of franchise stores reach
Slide 6: Product - Best Sellers
JFC x Compose | Product - Best Sellers Grapefruit Iced Tea Ade Espresso Red Bean Chocolate Oreo Injeolmi Smoothie Iced Americano
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Slide 8: Store traffic and queues comparison
Mega - No Traffic Compose - Long Queue Paik’s - Very Low Traffic 8am queue
Slide 9: Store Format
JFC x Compose | Store Format
Slide 10: Why the acquisition when it already has other coffee brands?
JFC x Compose FAQs | Strategic Intent Why the acquisition when it already has CBTL, Highlands Coffee, Milksha and Common Man Coffee Roasters?
Slide 11: Investment Criteria – Stakeholders' View
Investment Criteria – Stakeholders’ View 1. Strategic fit (4 Pillars of Chicken, C&T, CC, BB) and value accretive 2. Accretive cash returns measured by incremental EBITDA margin & dollar (@ 42% vs JFC @ 13.0% per Bloomberg) 3. Accretive multiple to Group EBITDA multiple (@8X trailing vs JFC @12X) 4.
Slide 12: Why invest in Korea?
JFC x Compose FAQs | Franchising Why invest in Korea?
Slide 13: Lucrative High Margin / High Unit Level Economics
Lucrative High Margin/ High Unit Level Economics 2023E Per capita spending at Coffee Café market, USD xx Gap with South Korea Asia 891.5 295.1 208.3 1.7x 2.8x 167.3 135.0 130.9 130.5 119.4 81.8 78.9 78.0 73.4 68.0 67.7 63.5 55.6 53.4 52.9 52.5 48.2 Italy Canada South USA Finland Sweden UK Singa- Ire
Slide 14: How significant is this acquisition to JFC's business?
JFC x Compose FAQs | Impact to JFC How significant is this acquisition to JFC’s business?
Slide 15: Impact to JFC
JFC x Compose FAQs | Impact to JFC • Debt free balance sheet, with starting cash of circa KRW70B (USD51M) • Superior cash returns and excellent profitability margins (EBITDA 42% and EBIT 40% margins) • Capital-light, 100% franchised business model. • Consolidation impact in 2024 (annualized): • +2%
Slide 16: How is JFC financing this purchase?
JFC x Compose FAQs | Funding How is JFC financing this purchase?
Slide 17: Funding of JFC's effective 70% shareholding
JFC x Compose FAQs | Impact to JFC Funding of JFC’s effective 70.0% shareholding: • Debt: $111M (47%) • Cash: $128M (53%)
Slide 18: Loss of focus? How will JFC manage this new business?
JFC x Compose FAQs | Capabilities Loss of focus? How does JFC plan to manage this new business? Why partner with Elevation Equity? What are they bringing to the table?
Slide 19: Elevation Equity Partners
JFC x Compose FAQs | Impact to JFC Elevation is a private equity firm focusing on mid-market buyouts and growth capital opportunities in the consumer space in Korea and the rest of Asia. Its founding members have over 30 years' experience investing in Asia and Korea, mainly within the consumer secto
Slide 20: Franchisee investment needed for a Compose store
JFC x Compose FAQs | Franchising If I’m a franchisee, how much investment do I need for a Compose store?
Slide 21: Franchise fees and store capex
JFC x Compose FAQs | Impact to JFC Initial Sign Up Fee: KRW7M (Sign Up 5Mn, Training 2Mn) Store Capex: KRW ~90M (USD65K) Royalty Fee: KRW 200K/month Majority of the income stream for Compose Coffee is from sale blended, roasted coffee beans to its franchisees.
Slide 22: Main competitive advantages of Compose Coffee
JFC x Compose FAQs | Competitive Advantage What do you think are the main competitive advantages of Compose Coffee?
Slide 23: JMCF Co. Ltd.
JFC x Compose | JMCF Co. Ltd. Compose Coffee is a dedicated coffee company with decades of coffee sourcing/blending/roasting Category Explanation experience. Area • 2,349 m2 (3,309 m2 of land) Proprietary in-house coffee roasting plant in Korea, Volume • Up to 9,000 tons per year enabling the provis
Slide 24: Highest Quality Beans @ Lowest Price to Market
Highest Quality Beans @ Lowest Price to Market Coffee Bean Distribution Process Industry Average Importer Wholesaler 3rd party Roasting Wholesaler Retailer Café etc. Factory Importer 3rd party Roasting 3rd Party Logistics Franchisee Factory Distributor Co-Procurement Import Green Beans Beans Roasted
Slide 25: Rationale of selling shareholders
JFC x Compose FAQs | Deal Background What’s the rationale of the selling shareholders and why did they sell this at only ~8x, given the growth/margins? - -
Slide 26: Deal Background: Purchase Price Mechanism
JFC x Compose FAQs | Deal Background Purchase Price Mechanism*: Enterprise Value of KRW 400 BN (non-negotiable) Plus Cash as of closing (estimated to be KRW 70Bn) Exclusivity to sell side (KR) and buy side (EEP)- no bidding Personal motive to stay in coffee, however, start Super Premium *subject
Slide 27: Briefing on Compose Coffee Planned Acquisition
Jollibee Foods Corporation Briefing on Compose Coffee Planned Acquisition July 9, 2024 - -