The transaction was completed in the fourth quarter of this year.
Text | Zhang Qin
Edit | Gong Fangyi
Tim Hortons, a Canadian coffee chain brand that has been in China for more than two years, decided to send its China business to the United States for listing within this year.
The transaction will be completed through the SPAC model that has been hot in recent years, with the counterparty being Silver Crest Acquisition, which is expected to close in the fourth quarter of this year. According to the exchange's regulatory filings, Tim Hortons' China operations are valued at $1.688 billion. That's less than half the size of Luckin Coffee.
Since being delisted from nasdaq for financial fraud, Luckin has moved to the relatively niche powder market (OTC). The stock price has risen by nearly 70% this year. The market capitalization is over $3.67 billion.
Tim Hortons China is a joint venture between RBI Group (Restaurant Brands International) and private equity fund Descartes Capital, which also owns Burger King and Popeyes. Sequoia Capital China and Tencent also have one seat each on Tim Hortons China's board of directors. Previously, Tencent had invested in the Canadian coffee chain that entered China in February 2019.
At present, Tim Hortons has 388 stores in China, more than 5,000 Tim Hortons stores worldwide, and 80% of its stores are located in Canada. Like Starbucks, Tim Hortons has three store types, flagship store, standard store and quick pick-up store, of which the average daily order volume of standard stores is about 300, and the unit price of customers is about 36 yuan, which is slightly lower than Starbucks.
In terms of the number of stores, in addition to Starbucks and Luckin, Tim Hortons is the third largest coffee chain brand in China in terms of store numbers, although the second place Luckin is ahead of its 4,000 stores, and the fourth place is the "star project" Manner that the head fund is competing for, and the first four brands have occupied about 70% of the market share.
The filing also reveals some of Tim Hortons' performance in China, in line with optimism across the coffee industry – revenue is expected to reach $671 million this year and adjusted net profit of about $37 million, three times last year's.
As for why Tim Hortons China was in a hurry to go public only two years after its inception, a leading fund investor explained to LatePost that in addition to the simple and faster listing process, the company was listed in the form of SPAC because it could not raise enough money in the primary market, and Tim Hortons China's valuation of $1.688 billion was not high. This may be related to the "too roll" of the Chinese freshly ground coffee market at this stage, all coffee brands are in the rapid store expansion stage, which means heavy capital investment, Tim Hortons may want to quickly take money in the secondary market in order to expand the business.
Since 2017, all kinds of capital have been injecting China's freshly ground coffee market, Starbucks will take back all stores in China as direct stores, is a strong signal to be optimistic about the Chinese coffee market, since then Luckin's $2.2 billion financial fraud storm has not hit the enthusiasm of investors, many coffee brands have embarked on the road of chaining with the help of capital. This year, the valuation of a single store in a number of freshly ground coffee stores such as Manner has been pushed to more than 100 million yuan, while the valuation of Starbucks's single store is about 25 million yuan.
Another investor who has participated in the SPAC listing told LatePost that Tim Hortons' listing in the form of SPAC and the tightening of the attitude of Chinese stocks on the Us Securities Exchange have nothing to do with the investor speculating that Tim Hortons negotiated the listing model soon after entering China, and now applying for SPAC is even slower than listing, but the valuation of Chinese stocks is too low, and the risk of listing is still very large.