SM backs out of Goldilocks takeover deal

Goldilocks president Richard Yee

The country’s largest conglomerate SM Investments Corp. has given up its bid to take over leading bakeshop chain Goldilocks Bakeshop Inc.

“Regarding the proposed acquisition by SM Retail of Goldilocks, both SM and Goldilocks have jointly agreed not to pursue the transaction given changes in the general business environment,” SM said in a press statement on Thursday.

Owned by the Yee family, Goldilocks operates a food retailing enterprise with over 600 stores here and abroad. Of the overseas stores, 12 are located in the US, two in Canada and six in Thailand.

“This was a mutual decision, which was jointly agreed upon after a friendly and productive dialogue. Since we first began talks with SM, so much has happened in the marketplace, and many changes have occurred in our respective business environments. This caused us to re-evaluate our position, and to arrive at a decision that we feel is best for both companies,” Goldilocks president Richard Yee said in a press statement.

Yee thanked the SM group for the intent to partner with his company. “This is yet another validation of our efforts to strengthen our leadership position. To this end, we remain focused on our plans and strategies, which has allowed us to achieve double-digit growth in the past few years. We now have over 600 stores to serve our customers nationwide, and we will continue this expansion in order to be more accessible to our customers,” he said.

Despite the aborted partnership, the Goldilocks chief said the bakeshop chain remained “committed to serving our customers with the best products wherever they may be.”

The Philippine Competition Commission approved at end-2017 SM Retail Inc.’s acquisition of Goldilocks but amid concerns that the latter may crowd out competitors in securing space in SM malls, PCC had asked SM to commit to certain measures such as an “information firewall.” This means that SM mall operator will not give Goldilocks access to competing mall tenants’ information—including sales data captured by the POS system of SM tenants, whether referring to consolidated sales, product category level or stock keeping unit level information, such as prices or quantities sold.

Maintaining this “information firewall,” the PCC had said, is meant to ensure that SM Retail/Goldilocks will not be able to use sales data or information of its competitors to its advantage.

The SM Group was made legally obliged to comply with its commitment and submit reports to the Commission. Over a period of five years, the parties would have been monitored periodically by a team of experts from PCC. Monitoring would have included random inspections.

The PCC had cited risks that discrimination or unfair treatment may arise in the form of arbitrarily assigning competitor tenants to disadvantageous locations or unfavorable lease terms, which amounts to partial foreclosure. It can also come in the form of giving less favorable lease terms or completely refuse them lease space in the mall, which amounts to total foreclosure, PCC chair Arsenio Balisacan had said. With a report from Roy Stephen C. Canivel