Max’s buys controlling stake in Pancake House for P3.9B

The Max’s restaurant group is taking over a controlling stake in publicly listed Pancake House Inc. for as much as P3.9 billion, a major consolidation in the food retailing industry that will create one of the country’s biggest restaurant chains with a combined network of at least 450 stores.

Pancake House’s principal shareholder, the Lorenzo family-led Pancake House Holdings Inc., had agreed to unload its 60.37-percent stake in the listed restaurant firm at P15 a share, the company disclosed to the Philippine Stock Exchange yesterday.

Shares of Pancake House surged by 21.99 percent to close at P17.20  Friday on optimism on the consolidation of the country’s two popular homegrown restaurant brands. Trading was halted at the stock exchange from 1:30 p.m. to 2:30 p.m. Friday following the disclosure of the material information.

The privately held Max’s group, for its part, will also make a tender offer to buy shares held by other minority investors in Pancake House by January 2014, giving other shareholders the option to exit at the same price that the Lorenzo family had agreed to sell out.

The total tender offer price values the entire share capital of Pancake House at P3.9 billion on a fully diluted basis, after the conversion into equity of remaining convertible debt securities issued by the company.

“This offer from the Max’s group is superior to the others we have received, including one from a foreign entity that just had too many legal and other obstacles to surmount and would have resulted in the company going private,” Pancake House president Martin Lorenzo said.

The transaction, Lorenzo said, would ensure that the company would remain “in the capable hands of a Filipino family with a deep understanding of the market and a solid commitment to the continued growth of the company.”

Robert Trota, Max’s chair, assured that the new shareholder group would retain Pancake House as a listed company. It was not mentioned whether the assets of Max’s would be infused into Pancake House.

“We at Max’s group are excited by this unique opportunity to bring together excellent resources and strong brands such as Pancake House and Max’s. Both companies share a long history of brand recognition and innovation, customer loyalty and proven track record for expansion,” Trota said.

“We are also confident that this transaction will reinforce the values of both Pancake House and Max’s in serving our customers,” he added.

Founded in 1974, Pancake House has 105 outlets of flagship brand Pancake House plus 300 other outlets across other brands like Dencio’s, Kabisera ng Dencio’s, Teriyaki Boy, Sizzlin’ Pepper Steak, Le Coeur De France, The Chicken Rice Shop, Maple and Yellow Cab.

The Max’s group, for its part, was founded in 1945 and now has 150 Max’s stores in the Philippines and overseas. The group, which is very popular for its fried chicken and other Filipino dishes, has also brought to the country international food brands such as Krispy Kreme and Jamba Juice. Its key shareholders are the Fuentebella, Trota and San Victores families.

The P15-a-share pricing of the deal marked a premium of 6 percent to Pancake House’s closing price on Thursday and a premium of about 7 percent to its 90-day volume-weighted average price at the local stock market.

BPI Capital Corp. served as the exclusive financial adviser to the Max’s group for the transaction.

Meanwhile, the deal excluded Pancake House’s culinary arts business operated through PHI Culinary Arts and Food Services Inc., which will be transferred to the parent holding firm.