Coffee SPAC deal relies on caffeinated growth
17/08/2021 08:58
(The author is a Reuters Breakingviews columnist. The opinions
expressed are their own.)
HONG KONG, Aug 17 (Reuters Breakingviews) - Tim Hortons
China is preparing a strong brew. The division of the Canadian
coffee and donuts chain, a joint venture between Restaurant
Brands International QSR.TO and private equity firm Cartesian
Capital, has agreed to merge https://sec.report/Document/0001104659-21-105459
with special purpose acquisition company Silver Crest
Acquisition SLCR.O in a deal valuing its enterprise at nearly
$1.7 billion. The Sequoia- and Tencent-backed 0700.HK seller
of breakfast wraps and Iced Capps is banking on rising coffee
consumption in the People’s Republic.
It’s hardly the only company hoping to cash in on China’s
burgeoning café culture. Comparable store sales at Starbucks’
SBUX.O 5,000-plus outlets in the country rose 19% https://investor.starbucks.com/press-releases/financial-releases/press-release-details/2021/Starbucks-Reports-Record-Q3-Fiscal-2021-Results/default.aspx
for the third quarter. But the deal values the business at a
heady 110 times the adjusted EBITDA that executives hope to make
in 2023 – Starbucks’ overall business trades at 18 times – and
rests on the company flawlessly brewing growth for several
years. Management projects, for example, that it’ll have more
than 2,750 profitable stores by 2026, up from 137 stores last
year. That’s definitely mug-half-full thinking. (By Sharon Lam)
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(Editing by Antony Currie and Oliver Taslic)
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