Retail tycoon Lucio Co is making a P1.5 billion windfall from the sale of his own stake in brandy firm Williams & Humbert SA to his publicly-listed liquor distribution company The Keepers Holdings Inc.
According to Abacus Securities Corporation’s Short Takes, the P1.5 billion profit is more than double the EUR25 million Co paid when he bought the 30 percent stake from the original owners of W&H in 2018.
In a disclosure to the Philippine Stock Exchange last week, The Keepers said it has executed Share Purchase Agreements covering the acquisition of 50 percent of Bodegas Williams & Humbert SA for P5 billion.
The 30 percent were sold by Co and his family’s real estate firm VFC Land Resources Inc. while the 20 percent were sold by the Medina family which is the original shareholder of W&H.
The consideration amounts to EUR88.75 million and is based on the independent valuation undertaken by PricewaterhouseCoopers (PwC). The cash consideration will be paid upon signing the Share Purchase Agreement and completing other legal and closing requirements.
“We had expected a lower price for the 50 percent stake. First, it exceeds the net proceeds from the secondary offering last year but, more importantly, it implies a much higher valuation for W&H (EUR177.5 million on a 100 percent basis) compared to when Mr. Co himself took a 30 percent stake in 2018 for only EUR25 million,” the brokerage said.
It noted that, W&H’s earnings last year is not much different from the level in 2018 so the higher price could be due to the premium for a larger stake or better prospects for next year.
Abacus believes The Keepers’ bottomline could get a boost of about P400 million per year, about 20 percent of its 2022 earnings, because of the acquisition and rates it a BUY.
The Keepers, the largest imported liquor distribution in the Philippines, said the acquisition will enhance the competitive position of the group and strengthen its hold and secure the company’s supply line of its flagship brand and category, “Alfonso” brandy.
The investment will also transform the company’s business model from a pure trading to a manufacturing and distribution one and provide an opening into markets outside the Philippines.
The equity investment will also be bottom line accretive from its share in the future net income of Bodegas Williams & Humbert.
Bodegas Williams & Humbert SA is a respected family-owned winery in Jerez de la Frontera, Spain, founded 140 years ago.
A forward-looking company producing a wide variety of wine and spirits specially sherry and is the leading producer of light brandy.
Bodegas William & Humbert SA distributes its products in Spain and in 50 countries worldwide and has been producing Alfonso, the Keepers’ biggest brand and the number one imported brandy in the Philippines for more than two decades.