Taiwan/Taipei, April 24, 2016
E.G-Sain, a subsidiary under XPEC Entertainment, has just announced its acquisition of local franchise Ikari Coffee by purchasing 91.59% share at NT$ 130 million. According to E.G-Sain, the company will be working towards 100% acquisition of Ikari Coffee in the near future and getting in touch with minor shareholders to negotiate relevant purchases.
According to E.G-Sain chairman Chin-Lung Hsu, Ikari Coffee has been turning profit over the years ever since the brand’s initiation back in 1994 and in the last 5 years, Ikari Coffee’s turnover (excluding franchise stores) had stayed at NT$ 360 million. At its peak, Ikari Coffee had 80 locations across Taiwan and still has close to 60 locations at present. In the past two years, in an attempt for vertical integration, Ikari Coffee invested close to NT$ 50 million in the confection venture Memo Bake Sweet Memo (which operated as Ikari Coffee’s independent snack and desert manufacturing business) and hot pot brand “Memo”. Consequently, Ikari Coffee suffered a loss of approximately NT$ 5 million.
During its 22 years of operation, Ikari Coffee has received numerous positive feedbacks and recognitions. It was the first coffee store franchise to adopt IC card credit topping system and has more than 20,000 active members. Ikari Coffee also received the 4th Taiwan Commercial Service Award for Outstanding Service 5 years ago. Defined as a community/business coffee chain that serves freshly brewed coffee with imported beans from Milan, Ikari Coffee has won the hearts of numerous consumers. Unfortunately, Ikari Coffee’s founder Fu-Jun Ho has suddenly taken ill in last June and has yet to recover from his ailment to steer the business towards the right direction. Consequently, shareholders of Ikari Coffee have been actively seeking a new buyer to take over the business.
After careful appraisal, by taking over Ikari Coffee’s existing supply chain for lite food, E.G-Sain stands to increase its annual turnover by NT$ 30 million. Not only that, it will also put an end to Ikari Coffee’s deficit in its bakery investment. By closing the small hot pot restaurant, Ikari Coffee stands a good chance of turning profits this year. After the acquisition, E.G-Sain now operates close to 60 service locations and the newly added dessert bar has the potential to double the sales of E.G-Sain’s classic honey cake and gift boxes licensed by LINE.
Since its NT$ 139 million acquisition by XPEC Entertainment on January 30 last year, E.G-Sain’s revenues have gone from deficit in excess of NT$ 10 million last year to making a small profit this year. In order to maximize the synergy for acquisition, both parties have come to finalize the terms of the acquisition on last Friday after more than 6 months of negotiations. The transaction is expected to be completed before the end of June. E.G-Sain will assume full control of Ikari Coffee’s board of directors, with the power to appoint the President and CFO for Ikari Coffee. The original team of management will remain in place and no changes will be made to the privileges of existing franchise owners.