Lotte to restart bid for full control of Pepsi PH

Korean firm Lotte Chilsung Beverage Co. Ltd. is now free to resume its tender offer to minority shareholders of Pepsi-Cola Products Philippines Inc. (PCPPI) that was earlier

halted by the Securities and Exchange Commission (SEC) due to concerns on the valuation report.

To recall, the SEC stopped Lotte’s tender offer in February due to conflict of interest on the part of its adviser. The fairness opinion attached to a report to minority shareholders had been issued by P&A Grant Thornton, which was also providing bookkeeping services to two entities related to PCPPI.

A fairness opinion is a report written by qualified analysts or advisors that evaluates the facts of a merger, acquisition, carve-out, spin-off, buyback or another type of purchase. It assesses whether or not a proposed stock price will be fair to all parties involved.

In a disclosure to the Philippine Stock Exchange on Monday, PCPPI said the SEC had affirmed the independence of P&A as financial advisor to render the fairness opinion and concluded there was “no reason to believe that P&A acted contrary to rules” of the Securities Regulation Code.

Lotte, which invested in PCPPI nine years ago and became its controlling shareholder, offered to buy about 2.134 billion common shares of the rest of the shareholders equivalent to 57.78 percent of outstanding stock at P1.95 per share. Based on the fairness opinion, the range of fair values from a financial point of view was between P1.92 and P2.17 per share.

Per the SEC’s latest directive, Lotte must file an amended report no later than five business days from receipt of copy of SEC’s letter on April 17.

Upon filing, Lotte could “immediately reopen and resume the mandatory tender offer and conduct the same for the next 10 days,” the disclosure said.

In its letter, Lotte Chilsung assured PCPPI shareholders of its intention to complete the transaction as provided under the terms and conditions of the tender offer. As Lotte already owns 38.88 percent of PCPPI, the purchase of the rest of the shares would allow the group to consolidate its ownership to 96.66 percent. INQ