Metro Pacific Investments Corporation (MPIC), through wholly-owned subsidiary Metro Pacific Agro Ventures Inc. (MPAV), has amended its agreement to acquire a strategic stake in coconut products producer Axelum Resources Corp. by subjecting the acquisition to profitability targets.
While Axelum disclosed to the Philippine Stock Exchange (PSE) that it has sealed the P5.32 billion deal for MPAV to acquire a 34.76 percent stake in Axelum, the basis for payment has been amended to be on installments and subject to “achievement of certain EBITDA milestones.”
In its disclosure to The Stock Exchange of Hong Kong, MPIC’s parent company First Pacific Limited said that MPAV’s agreement to acquire 1.19 billion common shares and 200 million redeemable preferred shares of Axelum has been amended on Dec. 19, 2023.
“Whilst the total highest consideration for the Transactions payable by the Group will remain unchanged at approximately P5.32 billion or approximately P3.83 per share, the basis for payment of consideration under the SPA has been amended,” FPC said.
It added that the amendments call for the payment to be on installments “to the effect an initial payment of P3.37 billion would be payable on or around December 22, 2023, with additional payments payable upon achievement of certain EBITDA milestones up to the original purchase price under the original SPA (share purchase agreement).”
“The amendments in relation to the payment by installments under the SPA were agreed following arms’ length negotiations of the parties. For the avoidance of doubt, an amount of P0.5 billion will be payable for the redeemable preferred shares also on or around December 22, 2023, which is not subject to the EBITDA milestones referred to above,” FPC said.
The firm said the parties also agreed to an extension of the settlement date of the SPA and the subscription agreement to January 15, 2024.
MPIC Chief Finance, Risk and Sustainability Officer Chaye A. Cabal-Revilla said last November that they had to “dig deeper” into the assumptions or forecasts of Axelum for 2023 and 2024 “because the expected outcome in terms of performance in our earlier due diligence has not happened... because they have not met their targets and they are going to re-forecast their numbers."
She said Axelum has been having difficulty in recovering from the weak sales in the US which is the major export market for its coconut products.
Meanwhile, Axelum said it has sealed its strategic partnership with MPAV, and Axelum Chairman and CEO Romeo I. Chan, said “we proudly welcome the investment of MPAV into Axelum. This partnership is built on a shared vision and profound commitment to spearhead initiatives that will modernize our local coconut industry. We aim to achieve this by leveraging our joint expertise, network and resources.”
“Most importantly, this will allow us to deepen our societal impact by providing sustainable livelihood to coconut farming communities, and thereby contributing to the continuous development of the country’s agriculture sector,” he added.
Through this alliance, Axelum and MPAV will aggressively pursue value-accretive opportunities both domestically and overseas, as it aims to maximize capabilities and competitiveness of Philippine coconuts in the global stage.
In the long-term, the partnership aspires to be a transformative leader in strengthening the country’s food supply chain, pioneering new farming technology and re-establishing agriculture as a core backbone to economic development and inclusive growth.
"This partnership embodies our commitment to sustainable investments,” said MPIC Chairman, President, and CEO Manuel V. Pangilinan.
He noted that, “Axelum's expertise in the coconut industry, combined with MPAV's ambition for Philippine agriculture, position us to make lasting contributions to the nation. We look forward to promoting sustainability and competitiveness in the country’s agricultural sector."
Axelum caters to a top-tier clientele comprised of renowned multinational consumer brands, across more than 30 high-growth export markets.
It produces an extensive range of premium coconut products including desiccated coconut, coconut milk powder, sweetened coconut, coconut milk and cream, reduced fat coconut, and coconut cooking oil.
In addition, Axelum is a major supplier to Vita Coco, the world’s largest and most popular coconut water beverage.