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Stock Commentary

Jollibee 'no comment' on potential Highlands Coffee stake sale

Merkado Barkada
Jollibee 'no comment' on potential Highlands Coffee stake sale

Jollibee [JFC 237.0 3.9%] [link] didn’t correct any of the reported details of a potential stake JFC’s Highlands Coffee chain in Vietnam.

The article said, according to “sources”, that JFC was in “advanced discussions” to sell between 10 and 15% of Highlands Coffee at a US $800 million enterprise valuation.

The article’s sources said that if the stake sale were successful, that might encourage JFC to push forward with an IPO for Highland Coffee that it has been considering for “many years”.

In its response, JFC said that it does not comment on “possible transactions”, and that it will only discuss transactions that have been completed and disclosed.

MB BOTTOM-LINE

The reason the stake sale is important to a potential IPO is that it demonstrates to banks and institutional investors that a sophisticated, non-related party was willing to purchase shares in Highland Coffee at a tasty valuation for JFC.

That’s the key: for JFC, a “successful” stake sale is one that pegs a high-enough valuation to make the prospect enticing to sell even more shares to the public through a subsequent IPO.

That’s a pretty hefty return for Jollibee, which purchased 50% of Highlands Coffee in 2011 for just $25 million.

JFC’s stock increased “only” 163% during the same time period.

 

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HIGHLANDS COFFEE

JOLLIBEE FOODS CORP.

PHILIPPINE STOCK EXCHANGE

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