Retail tycoon Lucio Co is selling another personal investment to one of his publicly-listed corporations.
In a brief disclosure to the Philippine Stock Exchange, Puregold Price Club said it is acquiring 100 percent of the Co family’s PSMT Philippines Inc. for P112.5 million.
“The Board of Directors of Kareila Management Corporation, owner and operator of S&R Membership Warehouse, a wholly-owned subsidiary of Puregold Price Club, Inc., approved to purchase 100 percent capital stock of PSMT Philippines, Inc.,” Puregold said.
No more details were provided by Puregold but an online search shows that PSMT Philipppines Inc. is engaged in the wholesale distribution of grocery items and its address is the same as the Bonifacio Global City branch of S&R.
Last September, Co made 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 PSE, 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.
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.