Jollibee To Acquire 70% of Mang Inasal

By on Oct 18, 2010 in Announcement, Business, Economy Comments

Here is the press release from Jollibee Foods Corporation announcing their plan to acquire 70% of Mang Inasal.


Metro Manila, Philippines, October 18, 2010 – Jollibee Foods Corporation

Jollibee Foods Corporation (JFC), the Philippines‘ largest food service company disclosed today that the terms of its unsolicited offer to acquire 70% of Mang Inasal Philippines, Inc. (MIPI), owner and operator of the Mang Inasal restaurant chain, have been unconditionally and irrevocably accepted by Injap Investments,Inc. (Injap) parent company of MIPI.

JFC’s unsolicited offer included the principal terms of the share purchase agreement, which will be signed within 30 days, subject to completion of JFC’s due diligence. On closing of the transaction, JFC will own 70% of MIPI, with 30% remaining with Injap. There is no material relationship between the sellers and JFC or its directors, officers and affiliates.

JFC’s Chief Finance Officer and Vice President Mr. Ysmael V. Baysa disclosed that the purchase price is estimated to amount to approximately 3 Billion Pesos, subject to the results of JFC’s legal, financial and tax due diligence. Part of the consideration in the amount of 200 Million Pesos had been paid by JFC as initial payment. Thereafter, 90% of the purchase price (less than the initial payment) will be paid on closing, with the remaining 10 % paid over 3 years from closing.

On an annual basis, JFC’s purchase of 70% of Mang Inasal is estimated to add 5% to its worldwide system wide sales, 5% to its revenues, and 7% to its net operating income. Mang Inasal will also increase JFC’s store network in the Philippines by 19% and on a worldwide basis by 16%.

JFC’s financial and tax due diligence will be conducted by Pricewaterhouse Coopers – Isla Lipana & Co. with focus on the consolidated audited financial statements of MIPI for the year 2009 and interim period January to June 2010, as audited by KPMG – Manabat Sanagustin & Co., CPAs. Its legal due diligence will be conducted by Romulo Mabanta Buenaventura Sayoc and De Los Angeles.

For purposes of valuation, JFC used several methods, including discounted cash flow method and market-based valuation methods such as EBITDA multiple and Price/Earnings multiple. JFC’s purchase price for Mang Inasal is comparable with the multiples used in its previous acquisitions. JFC has sufficient financial resources to pay for the acquisition in cash that was generated from its operations.

JFC will build shareholder value by growing the sales of Mang Inasal’s existing stores through the application of JFC’s knowledge of consumers and its available recipes and products, continued expansion of Mang Inasal’s store network, cost improvement on its raw materials, and greater operational efficiency by applying JFC’s technology and scale.

It is the intention of JFC to maintain MIPI’s current personnel, subject to their meeting the JFC Group’s organizational standards.

Mang Inasal serves primarily grilled chicken and Filipino food. As of October 18, 2010, the chain consists of a total of 303 stories, of which 24 are company-owned and 279 are franchised. It operates 2 commissaries. MIPI is in a positive net cash position. It has estimated annual total revenues of 2.6 Billion Pesos and system wide sales of 3.8 Billion Pesos.

The JFC Group of Companies operates the Philippines’ largest fast food network. As of September 30, 2010, it had a total of 1578 stores in the country: Jollibee brand with 703, Chow King with 404, Greenwich with 218, Red Ribbon with 215, Delifrance with 23 and Manong Pepe’s with 15. It was also operating 375 stores abroad: Yonghe King in the People’s Republic of China with 185 stores, Jollibee 64 (mainly in the United States with 26, Vietnam with 20, and Brunei with 11), Red Ribbon 38, all in the U.S., Chowking 37 (mostly in the U.S. with 19 and Dubai with 15) and Hong Zhuang Yuan 51 for a total of 1,953 stores worldwide.

This press release was copied from Philippine Stock Exchange’s corporate disclosures page.

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