Century Pacific OKs P4.5-B purchase of affiliate unit

Shareholders of leading canned food producer Century Pacific Food Inc. (CNPF) have approved its P4.5-billion acquisition of an affiliate which is engaged in integrated coconut production.

In a special meeting Friday, shareholders approved the purchase of General Santos-based Century Pacific Agricultural Ventures Inc (CPAVI), which produces high-value organic-certified and conventional coconut products for both export and domestic markets.

Of the purchase price of P4.5 billion, P2.25 billion will be paid in cash while the other half will be paid with 128.2 million new shares of CNPF at an issue price of P17.55 billion, according to the disclosure yesterday.

Shareholders also approved the listing of the newly issued shares on the Philippine Stock Exchange Inc.

The deal was valued at a “meaningful discount” to CPAVI’s value based on discounted cash flows and peer benchmarking of listed comparable firms, the disclosure said. It was earlier estimated that the consolidation of the coconut enterprise into its books would increase CNPF’s 2016 earnings by 7 to 8 percent and improve net profit margins.

The group believes that healthy and organic coconut products— for which there is rising demand in western countries—would be an area where the Philippine industry could be globally competitive in.

Established in August 2012, CPAVI operates an integrated coconut facility, whose primary products are organic-certified, and conventional coconut water, desiccated coconuts and virgin coconut oil.

The coconut water and virgin coconut oil are sold to global brands and retailers in their respective categories. Other products include copra, coco meal, and coco shells, which are sold to the domestic market. It also has other coconut-based products under development.

CPAVI has multiyear agreements with major customers, ensuring continued business and revenue growth.

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