Retailer Puregold Price Club Inc. sold P6.5 billion worth of secondary shares in an overnight equity deal that brought back its public ownership to 32 percent, the same as the level before it took over warehouse shopping chain S&R.
Puregold’s controlling shareholder, the family of Lucio Co, sold 250 million common shares at P26 per share in an overnight private placement deal arranged by UBS.
“The transaction results in an increased public free float from 23 percent to 32 percent, in line with the public float prior to the acquisition of Kareila Management Corp., which owns the S&R chain,” the company said in a disclosure.
UBS Investment Bank acted as sole global coordinator and bookrunner for the transaction. The accelerated placement took five hours and was over 2.3 times oversubscribed with more than 70 investors participating, UBS Philippines managing director Lauro Baja said.
The transaction was launched with a base offer of 220 million shares at a price range of P26 to P27 per share. Due to overwhelming response from global institutional investors, the transaction was upsized to 250 million shares.
“The Puregold private placement was an excellent opportunity for investors to participate in a pure Philippine consumer play,” said First Asset Management Co. president Gus Cosio.
Since the block was priced at a discount to the P28.40 closing price of Puregold on Wednesday, the company’s share price dropped by 4.93 percent to finish at P27 per share on Thursday.
Puregold earlier acquired 100 percent of Kareila for P16.5 billion through a share-swap transaction with the Co family, which was also the controlling shareholder of Kareila. In exchange for the shares in Kareila, Puregold paid the Cos 766.4 million of its common shares, a portion of which was unloaded Thursday night via this private placement deal.
In the meantime, the consolidation gives Puregold-S&R a combined share of about a fifth of the retail trade industry. It now ranks second biggest next to the SM group.
Puregold has a current market share of 16 percent while that of S&R is 3.3 percent.
Kareila, through its membership shopping business, has a membership base of 215,000, mainly from the A-B market segment, complementing Puregold’s C-D-E market.
S&R was set up in 2000 in partnership with Price Smart of the United States. It was acquired by the Co family in 2006 and now has six stores.