Reasons behind Highlands Coffee's sale to Philippine fast food giant

The sale of Vietnam’s popular Highlands Coffee to the Philippines’ Jollibee Foods Corporation (JFC) earlier this year has surprised many.

The details of the deal were announced on January 24 by Jollibee, when it admitted it had acquired a 50 percent stake worth $25 million in Vietnam-based SuperFoods Group from its partner, the Viet Thai International Joint Stock Co. (VTI), which owns Highlands Coffee and operates Highlands Coffee Shops, Pho 24 restaurants, and the Hard Rock Café franchised stores in Macau, Hong Kong and Vietnam.

Highlands Coffee has 54 trendy stores in Vietnam serving Vietnamese coffee and light meals.

Reasons?

According to some merger and acquisition experts, the reasons for VTI’s selling of Highlands Coffee and other high-quality products while they are bringing them annual sales of around $30 million was not hard to understand.

First of all, Jollibee has in turn extended a $35-million loan at low interest rate of 5% to VTI after the sale.

Some people also assume that VTI and Jollibee have co-operated to prepare for the competition with Starbucks which is likely to come to Vietnam in the near future.

According to JFC, its joint venture with VTI aims to offer Asian mass consumers high quality coffee and café experience at affordable prices through the Highlands Coffee Shops and Highlands Packaged Products.

Jollibee said it plans to serve Highlands Coffee in the restaurants of its various brands in order to upgrade the quality of its coffee at prices its consumers can afford.

The Jollibee Foods Corporation operates the largest restaurant chain in the Philippines with a total of 2,003 stores in the country and 468 stores overseas as of December 2011.