By JAMES A. LOYOLA
The Securities and Exchange Commission (SEC) has issued an order to stop the ongoing ₱4.16-billion tender offer by Lotte Chilsung Beverage Co., Ltd. for the public shares of Pepsi-Cola Products Philippines, Inc. (PCPPI) due to a violation of rules.
The SEC said that its Markets and Securities Regulation Department (MSRD) ordered Lotte “to immediately cease from conducting its mandatory tender offer for the minority shareholders of PCPPI and to allow shareholders who have tendered their shares to withdraw the same.”
This is for noncompliance with Rule 19 of the 2015 SRC IRR, particularly the Guidelines on the Conduct of Valuation and Issuance of Fairness Opinion under Rule 19.2.6.
“Among others, the fairness opinion attached to the tender offer report filed by Lotte was issued by P&A Grant Thorton, which is currently providing bookkeeping services to two entities related to PCPPI,” the SEC noted.
It added that, “The MSRD finds that the business relationship of P&A Grant Thorton with the two entities, where PCPPI holds substantial shareholdings, could reasonably be perceived to undermine its independence to conduct and issue the fairness opinion.”
Lotte earlier said it is reopening the tender offer while it waits for the Philippine Competition Commission to approve the planned acquisition.
In a disclosure to the Philippine Stock Exchange, PCPPI said the SEC had granted its Request for Exemptive Relief of the rule that it should settle payments within 10 business days from the end of the tender offer last January 16, 2020.
Lotte Chilsung wants to be allowed to settle the payment or to return the tendered shares within five days after the PCC decides on whether to allow it to buy more PCPPI shares.
The SEC’s grant of exemptive relief hinged certain conditions such as requiring the Tender Offer to remain open until 10 days from the disclosure of the PCC decision on the transaction.
Lotte Chilsung is offering to buy up to ₱4.16 billion worth of PCPPI shares from minority shareholders to gain majority control of the beverage firm.
PCPPI said Lotte Chilsung has published its intent to acquire up to 2.13 billion common shares of the Company through a tender offer to all shareholders other than Lotte Corporation and the members of the Board of Directors.
The target shares comprise 57.58 percent of PCPPI’s outstanding capital of 3.69 billion shares. The company has a public float of 32.78 percent.
The tender offer price has been pegged at ₱1.95 per share.