MANILA, Philippines – The country’s biggest food retailer is acquiring majority control of a fast-growing barbeque fastfood chain in a continuing bid to beef up its business portfolio.
In a disclosure to the stock exchange, Jollibee Foods Corporation said it is acquiring 70% of Mang Inasal Philippines Inc, the owner and operator of Mang Inasal, a chain of 303 restaurants all over the country serving grilled chicken and other Filipino food.
Of the estimated P3 billion transaction price, Jollibee has paid P200 million to parent firm Injap Investments Inc., which will continue to hold 30% of Mang Inasal.
Ninety-percent of the balance will be paid when the two parties sign a share purchase agreement, which is subject to a 30-day due diligence conducted by PriceWaterhouse Coopers-Isla Lipana & Co. auditing firm and Romulo Mabanta Sayoc De los Angeles law firm. The remaining 10% will be paid over 3 years.
Mang Inasal’s network will add about 5% to Jollibee’s worldwide systemwide sales, 5% to its revenues, and 7% to its operating income. Once completed, the deal will also increase Jollibee’s current 1,578 stores in the Philippines and 375 abroad by 16%.
Jollibee has recently sold its stake in Delifrance, a French pastry store that it acquired in 2006 and divested from two businesses in Taiwan and China in line with its thrust to concentrate on larger quick-server restaurant businesses.
Jollibee was the brainchild of Chinese-Filipino entrepreneur Tony Tan Caktiong. His 1975-era ice cream parlor business-turned popular burger chain has become a textbook classic on the how a small local business could surpass a multinational giant, in this case McDonalds, in the Philippine market. Jollibee infused local food preferences in its menu and adapted to the changing business landscape.
Caktiong has since earned his place in global business after Ernst and Young chose him as Entrepreneur of the Year in 2004. A US-based Jollibee branch even appeared on "Glee," a popular American TV show "Glee".
Caktiong has since expanded the business mostly through organic growth and aggressive acquisitions. Other brands now include Chowking, Greenwich, Red Ribbon, Manong Pepe’s, Yonghe King and Hong Zhuang Yuan (China). During the first half of the year, Jollibee posted a net income of P1.43 billion, up 9.8% from P1.3 billion booked in the same perid last year on strong performance of local and foreign stores.
Jollibee’s success story has inspired other entrepreneurs in the country, including the Iloilo-based Sia family who established Mang Inasal in 2003. Edgar Sia II, who has Chinese roots like Caktiong, positioned Mang Inasal as an alternative quick service restaurant among a sea of food chains that have mushroomed all over the country. Mang Inasal serves charcoal-grilled chicken (“Inasal” in Ilongo dialect), wraps its rice in banana leaves sourced from Guimaras island, and uses bamboo sticks sourced from various cooperatives in the province for skewers. It is also known for serving unlimited rice.
Mang Inasal’s owners were going to tap its success story, which has inspired province-based entrepreneurs who aspire to go nationwide, for its plans to tap the stock market in 2010. The additional capital was supposed to fund its plan to have 500 stores by 2012. Currently has a chain of 24 company-owned stores and 279 franchised ones. It has 2 commissaries. It has annual total revenues of P2.6 billion.
Jollibee’s unsolicited offer proved too difficult to refuse, however. Jollibee said it will continue the “expansion of Mang Inasal’s store network, cost improvement on its raw materials, and greater operational efficiency by applying [Jollibee’s] technology and scale."
The Jollibee burger chain also currently offers barbeque chicken.