MANILA, Philippines (UPDATE) - Fast food giant Jollibee Foods Corp. has agreed to buy a major stake in the firm that operates the Burger King franchise in the country for P65.5 million.
In a disclosure to the Philippine Stock Exchange, Jollibee said it has signed an agreement to purchase 54% of BK Titans Inc., which owns PERF Restaurants Inc., the sole franchisee of the Burger King brand in the Philippines.
It said the acquisition will give it presence in the premium price segment of the hamburger category in the fast food market.
"Jollibee expects [this segment] to grow appreciably in the years ahead as the Filipino consumer's standard of living rises from the growing economy."
Jollibee said Burger King was "profitable," generating annual revenues of P800 million.
Burger King has 23 outlets in the Philippines and a total of 12,300 in 78 countries worldwide.
Jollibee, on the other hand, runs the largest fast food network in the Philippines. As of August, it had a total of 1,941 Jollibee, Chowking and Red Ribbon stores nationwide. The company also owns the Mang Inasal brand, which it acquired last year for P3 billion.
The Burger King deal is the third restaurant chain acquisition in two months. In August, Agrinurture Inc. bought bought 51% of The Big Chill group for P20 million.
Earlier this month, Pancake House Inc. bought all of Yellow Cab Pizza for P800 million.
Alex Pomento, head of research at Macquarie Securities' Philippine unit, said the deals could be a sign that companies see too much competition and the need to buy market share.
"There is not much potential. You see consolidation in the industry. Big players are trying to expand market through acquisition while small players are selling out while there is still premium to be made."
"There's too many players to service a market not growing fast enough. The biggest problem is logistic. They need to spend more on distribution network to reach customers," he added - With Coco Alcuaz, ANC