Robinsons buys Rustan retail chain
Competition in local food retailing has further heated up with an P18-billion deal that will allow Gokongwei-led Robinsons Retail Holdings Inc. (RRHI) to take over high-end grocery chain operator Rustan Supercenters.
Rustan Supercenters operates food retail brands “Marketplace by Rustan’s,” “Rustan’s Supermarket,” “Shopwise Hypermarket,” “Shopwise Express” and “Wellcome.” It was formerly owned by the Tantoco family, which eventually sold lock, stock and barrel to a unit of London-listed Dairy Farm International Holdings Ltd.
The Gokongweis have now struck a deal with Dairy Farm unit Mulgrave Corp. B.V (MCBV) to buy the latter’s 100-percent stake in Rustan Supercenters using RRHI stocks as currency.
Certain members of the Gokongwei family intend to sell some of their shares, which will result in the Gokongweis effectively owning 51 percent of the expanded capital of RRHI, the retailer disclosed to the Philippine Stock Exchange late Friday. After the completion of the secondary sale tranche, Dairy Farm, through MCBV, will own 18.25 percent of RRHI.
This transaction boosts RRHI’s position for a three-way competition among major food retailers, said Jose Mari Lacson, head of research at ATR Asset Management. He was referring to the competition with the two leading players, SM Retail and Puregold Price Club Inc.
“It gives them (RRHI) access to the higher end of the market. But they are already there with Robinsons Select. You get the brand though. Supermarkets are the most stable retail business for these guys so in a way it should enhance (RRHI’s business),” Lacson said.
With the prospective consolidation of RRHI and Rustan Supercenters’ businesses, Lacson said it had become a “three-way fight” among food retailing giants.
RRHI grew its core net profit last year by 13.7 percent to P4.7 billion on higher sales from its nationwide store network. Consolidated net sales expanded by 9.4 percent last year to P115.2 billion on the back of a 2.7-percent same-store sales growth alongside the sales contribution from new stores.
The supermarket segment is RRHI’s biggest cash cow, accounting for 45.4 percent of consolidated net sales and 43.7 percent of consolidated cash flow.
Rustan Supercenters is estimated to add around P23 billion in annual revenues to RRHI. Based on its website, Marketplace has 30 stores while Shopwise, which pioneered the hypermarket concept in the Philippines in 1998, has 18 stores. Wellcome has about a dozen stores.
As of end-2017, RRHI operated 154 supermarkets. Including other retailing formats, RRHI had a total of 1,718 stores, on top of the 2,015 franchised stores of pharmaceutical retailer TGP.
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