Beer Chang maker buys up KFC Thailand restaurants

Beer Chang maker buys up KFC Thailand restaurants

Alcohol kings ThaiBev have bought up all KFC restaurants in Thailand, raising the very unlikely vision of beer with your fast food. (Photo provided)
Alcohol kings ThaiBev have bought up all KFC restaurants in Thailand, raising the very unlikely vision of beer with your fast food. (Photo provided)

Thai Beverage, the spirits giant that makes Chang beer and SangSom rum, is expanding into the fast-food business.

ThaiBev agreed to purchase more than 240 existing KFC restaurants in Thailand for about 11.3 billion baht ($340 million).

A deal is also in place for the company to take over stores that are being developed, with the cost of those locations to be determined when the transaction closes, according to a filing.

KFC is operated by a US company, Louisville, Kentucky-based Yum! Brands Inc., which also runs the Pizza Hut chain.

Nongnuch Buranasetkul, senior vice-president for the food business, said besides the business expansion, the deal would give ThaiBev access to KFC's network across the country.

"With QSA’s restaurant management expertise, we are well positioned to accelerate KFC’s further expansion in Thailand," she said in the statement.

The acquisition is expected to be completed by the end of this year, the statement said (PDF link).

Billionaire ThaiBev chairman Charoen Sirivadhanabhakdi, who founded the company, has been seeking to diversify ThaiBev's operations for years, with a goal of generating more revenue from non-alcoholic beverages by 2020.

For Thai Beverage, the KFC deal is a bid to seize on the popularity of chicken in Asia, according to Nirgunan Tiruchelvam, a director at Religare Capital Markets in Singapore.

"The KFC acquisition is a very good way of exposing oneself to the rise of quick-service restaurants in Asia, especially the rise of chicken consumption," he said.

Thailand accounted for 2% of KFC's sales in emerging markets last quarter. It was the only region in that division that saw sales drop year-over-year, posting a 2% decline.

Mr Charoen previously expanded his property business amidst government measures to curb alcohol consumption. He was ultimately forced to list the company unit in Singapore in 2006 after activists and monks held protests to block a local share sale by the company.

The company's long-term strategy involves generating 50% of its revenue from countries outside Thailand and non-alcoholic beverage by 2020. That's expected to drive more deals in the region.

Sales outside that country amounted to less than 4% in the last fiscal year, according to data compiled by Bloomberg.

"Thai Beverage is a company that is looking to expand in the food and beverage space in Southeast Asia," Tiruchelvam said. "It has very strong core cash flow from its spirits business, and it's expanding into other areas."

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