Lotte eyes full ‍control of Pepsi PH

Nine years after buying into beverage-maker Pepsi Cola Products Philippines Inc. (PCPPI), Korean conglomerate Lotte is making an offer to buy out other shareholders of the company in what is widely seen as a prelude to possible delisting from the local stock exchange.

In a tender offer report, Lotte Chilsung Beverage Co. Ltd. offered to buy about 2.134 billion common shares equivalent to 57.78 percent of outstanding stock of PCPPI at P1.95 per share. Assuming all other shareholders will accept the offer, the equity deal could reach P4.16 billion.

“The tender offer is an opportunity for shareholders to realize their investment at a significant premium to the current share price,” Lotte said in the report that was in turn disclosed by PCPPI to the Philippine Stock Exchange (PSE) on Wednesday.

The offer marks a premium of about 39 percent from the P1.40 per share closing price of PCPPI on Tuesday, Dec. 10. This also represents a 12.27-percent premium over the six-month volume weighted average price (VWAP) and 6.14-percent premium over the three-month VWAP, the company disclosed.Based on a fairness opinion issued by PCPPI’s financial adviser, Punongbayan & Araullo, the range of fair values from a financial point of view was P1.92 to P2.17 a share.

On Wednesday, PCPPI went on a one-day voluntary trading suspension at the PSE. The tender offer will run from Dec. 12, 2019 to Jan. 15, 2020, while crossing of the shares is targeted by Feb. 7, 2020.

Lotte stated in the tender offer report that it had “no plans” to delist PCPPI from the PSE at present but acknowledged that it could be subject to involuntary delisting if it could not comply with the minimum public ownership of 10 percent.As Lotte already owns 38.88 percent of PCPPI, the potential purchase of the rest of the shares would allow the group to consolidate its ownership to 96.66 percent. “If a company fails to comply with the minimum public ownership requirement of the PSE, involuntary delisting procedures may be initiated,” the company said.Lotte is currently the single biggest stockholder group in PCPPI, followed by Netherlands-based Quaker Global Investments B.V. with 25 percent.

Some investors are satisfied with the tender offer price. “It’s lower than our target price but far better compared to recent ones [that delisted from PSE],” Abacus Securities head of research Nicky Franco tweeted.

Delisting is currently a sensitive issue in the stock market. Beyond valuation issues, however, there are also other analysts who are alarmed by the growing number of companies bowing out of the local stock exchange.