Rustan’s name not part of RRHI deal

Gokongwei-led Robinsons Retail Holdings Inc. (RRHI) cannot use the trademark and trade name “Rustan’s” even after shelling out P18 billion to acquire the high-end grocery chain Rustan Supercenters from a unit of London-listed Dairy Farm International Holdings Ltd.

This was clarified yesterday by Nedy R. Tantoco, chair and CEO of the Rustan Group of Companies (RGC).

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 it to Dairy Farm. The Gokongweis 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.

The Tantoco family, operator of Rustan Group of Companies, sought to clarify certain issues on the sale of Rustan Supercenters by the Dairy Farm Group to RRHI subject to the approval of the Philippine Competition Commission and the Securities and Exchange Commission.

Tantoco pointed out that while Dairy Farm had the contractual right to use the Rustan’s trademark and trade name from its first acquisition in 2012 due to a sizeable shareholding in Rustan Supercenters, that contract was for “a limited period of only five years commencing from the year 2012 and was terminated upon our written notice to the Dairy Farm Group on April 3, 2018.”

She said that they did not issue a termination notice earlier because there were active ongoing negotiations between the Tantoco family and the Dairy Farm Group for the renewal of the contract to use the Rustan trademark and trade name.

“So, contrary to media reports, the Rustan trademark and trade name were never a part of the business transaction between RRHI and Dairy Farm Group, legally or otherwise,” Tantoco said.

She said that the Rustan’s trademark and trade name were owned solely by Rustan Commercial Corp. (RCC) and the use by any third party would require the prior written consent of RCC.

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 was estimated to add about 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.

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.

MCBV had initially bought a 50-percent stake in Rustan Supercenters from the Tantoco family in 2012 before increasing this to 66 percent and, eventually, 100 percent.

The Dairy Farm Group operates supermarkets, hypermarkets, health and beauty stores, convenience stores, home furnishing stores and restaurants around Asia.

The Group carries several brands such as Giant, Cold Storage, Jason’s Marketplace and Maxim’s. It also operates 7-Eleven and Ikea stores in Asia.