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Largest acquisition of Jollibee by store count

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South Korea is 3rd in globally in per capita coffee

consumption

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Jollibee getting into promising markets -banker

(Adds context in paragraph 2, share price in paragraph 4,

banker's and company comments in paragraphs 5 and 7)

By Neil Jerome Morales

July 2 (Reuters) -

The Philippines' biggest fast-food chain Jollibee Foods

will acquire a majority stake in South Korea's Compose

Coffee, as part of a deal valuing the target at $340 million,

the company said on Tuesday.

Jollibee's largest acquisition by number of stores

continues the company's expansion overseas, which will account

for majority of its branches in the future.

Jollibee's unit Jollibee Worldwide Pte will acquire 70% of

privately held Compose Coffee for $238 million, and its

majority-owned Titan Fund will take 5%, the fast-food firm said

in a statement. The remaining 25% will be held by private equity

firm Elevation, it said.

Shares in Jollibee, which has a market value of $4.29

billion, rose 0.44% on Tuesday, outpacing the 0.62% decline in

the broader stock market index.

"This is a good move by Jollibee to further expand its

global footprint and take advantage of attractive opportunities

in promising markets," said Juan Paolo Colet, managing director

at investment bank China Bank Capital in Manila. The acquisition

is expected to be cash accretive, creating shareholder value

over the long run, he added.

Compose Coffee has 2,470 stores, all franchised, giving

it a debt-free balance sheet, and good cash returns and profit

margins, said Jollibee, which will increase its global store

network to 10,000 with the deal.

The investment gives Jollibee access to South Korea,

which ranks third globally in terms of coffee consumption per

capita, the company said.

Compose Coffee and its roasting facility were founded in

Busan in 2014.

Known for its sweet-style spaghetti, burgers and fried

chicken, Jollibee is dominant in the Philippines, outselling

McDonald's and Yum Brands' ( YUM ) KFC ( YUM ).

In 2019, Jollibee invested $100 million to

acquire

loss-making Coffee Bean & Tea Leaf.

($1 = 58.79 Philippine pesos)