Uytengsus complete sale of Alaska Milk stake

MANILA, Philippines—The Uytengsu family bowed out of a 40-year-old milk-making business Tuesday with the execution of the sale of a 60.8-percent stake in Alaska Milk Corp. to Dutch dairy giant Royal Friesland Campina (RFC) for P12.86 billion.

About 535.74 million shares were crossed at the Philippine Stock Exchange for P24 each, the price at which RFC must buy out the rest of the shareholders under the mandatory tender offering. The deal thus valued AMC’s outstanding shares at P21.2 billion. The shares were crossed by R. Coyiuto Securities, Maybank ATR Kim Eng Securities and JP Morgan Securities.

Wilfred Steven Uytengsu will continue to lead AMC’s management team as president and chief executive and will remain as a director of the company.

In compliance with regulatory requirements, RFC will launch a tender offer for the remaining 276.7 million publicly traded shares of AMC. The transaction is expected to close around May and is subject to customary closing conditions, including receipt of certain regulatory approvals.

Jose Mari Lacson, head of research at Campos Lanuza & Co., said the selling shareholders got a fairly good deal of about 12 times AMC’s 2010 earnings, which was their best year for profits due to the then declining skimmed milk prices. “However, we believe that the buyer is actually paying double the P/E (price-to-earnings ratio) of normalized earnings. The premium likely factors in cost of control,” Lacson said.

Manny Cruz, chief strategist at Asiasec Equities, said the deal would result in an increase in the firm’s public float and one basic impact was a display of “confidence in the Philippine consumer industry and continued rise in consumption as evidenced by a continued surge in remittances.”

Cruz noted that the AMC deal perked up consumer stocks in the country in the last two weeks, aiding the main index. He said this was especially since the deal was priced at a PE ratio of close to 22 times. “The fact that there was such a willing buyer was an issue of confidence,” Cruz said.

Comparatively, Universal Robina Corp. is trading at a PE ratio of 19 and Jollibee Foods Corp. at 32, Cruz said.

A PE ratio of 22 means the buyer is paying 22 times the amount of money a company is making in a given year.