MANILA—Homegrown Jollibee Foods Corp. (JFC) is increasing its first purchase option in American fast-food chain Smashburger by 10 percent in a bid to capture bigger slice of the USD 100-billion United States (US) burger market.
JFC told the local bourse its wholly owned subsidiary, Bee Good! Inc. (BGI), and Smashburger Master LLC have amended their agreement to enable the former to buy more shares in SJBF LLC –the operator and franchisor of Smashburger- between the years 2018 to 2021.
With the amendment, BGI shall be entitled to purchase from Master an additional 45 percent of SJBF LLC during the four-year period, from just 35 percent under the original agreement.
BGI will acquire the remaining 15 percent in the operator and franchisor of Smashburger between the years 2019 to 2026, thus achieving full buy out by that period.
The purchase price for the remaining 60 percent will be based on the achievement of certain financial performance targets agreed between BGI and Master.
BGI bought 40 percent of the Smashburger for USD 99.47 million in October 2015.
“This acquisition will make the US one of JFC’s most important markets and drivers of long term growth along with the Philippines, China and the Filipino markets abroad,” JFC said.
Smashburger, with headquarters in Denver, Colorado, currently has 374 restaurants mostly in the US.
Smashburger estimates system wide sales of about USD 339 million in 2015, an amount equivalent to 12 percent of JFC’s estimated worldwide system-wide sales for the same year.
Its system-wide sales have been growing at an annual rate of around 30 percent between 2011 and 2015, while its store network has been increasing annually by about 20 percent.