MANILA, Philippines—Milk manufacturer Alaska Milk Corp., now controlled by Dutch dairy giant Royal Friesland Campina, is mapping out an offshore expansion program targeting Southeast Asia but delisting from the Philippine Stock Exchange by the third quarter of this year.
“The capital markets don’t serve Alaska the way they did 15 to 17 years ago when we took the company public. Going forward, we look at the advantages of being a privately held company again,” said AMC president and chief executive officer Wilfred Steven Uytengsu.
Under the Securities Regulation Code, a purchase by a new investor of more than 50 percent triggers a mandatory tender offer to minority shareholders. “When you have a situation like that, it makes sense to effectively become a privately held company and I think our goals are aligned with that,” Uytengsu said.
The Alaska chief said RFC was expected to get over 90 percent of the company’s outstanding shares when the tender offer closes by June, after which it would take another 60 to 90 days to undergo the delisting process. He expects the process to be completed by August and September.
The Uytengsus earlier sold their 60.8-percent stake in Alaska to RFC for P24 per share or a total of P12.86 billion.
Alaska had no need to be a listed company because it was enjoying a net capital position, Uytengsu said. At the same time, he said the company could be inadvertently telegraphing strategic moves to competitors when disclosing so much information to the PSE.
During the stockholders’ meeting, Uytengsu said residual shares would still be there but noted that it would be beneficial for minority shareholders to accept the tender offer because of the tax and stock trading ramifications. At the same time, he said it would be uncertain whether the dividend policy maintained by Alaska as a public company would be kept when it reverts to private hands, suggesting that the company may, henceforth, choose to reinvest earnings into the business rather than continue declaring generous dividends.
“Obviously, as a publicly listed entity, our obligations to shareholders are much more diverse—not just stock price appreciation but also dividends,” Uytengsu said, adding that Alaska had been giving one of the highest dividend yields of around 6 percent in recent years.
“Moving forward, we don’t have the same requirement. If we want to invest money back into the business whether we’re building brands, acquiring businesses or launching new products, a lot of new money that went to dividends will go back to investing in the business,” he said.
On the tax and stock liquidity implications, Uytengsu was referring to the higher tax on capital gains that shareholders will have to bear if they sell shares in an unlisted company versus the one-half of 1 percent preferential rate on trades of publicly listed shares.
Meanwhile, Alaska is still committed to doubling its business as it expects to boost net sales to P24 billion by 2014 from about P12 billion at the end of last year. Offshore expansion is seen adding to the company’s growth as the company is bullish on Southeast Asia, particularly the “VIP” block—referring to Vietnam, Indonesia and Philippines—which Uytengsu noted as offering the “low-hanging fruits.” He noted the growing middle class and population in these countries especially in the Philippines.
The company’s new controlling stockholder RFC already has existing businesses in Malaysia and Thailand.
The planned unification of Southeast Asian markets by 2015 could only be beneficial to Alaska, Uytengu said. “It’s very exciting. This is the time when you want to be in Southeast Asia. The prospects are good. The fundamentals of the Philippines are the strongest that they’ve ever been especially by then, but we also want to take a look at Southeast Asian neighbors,” Uytengsu said.