D&L offers to buy all Chemrez shares

Food and plastic input manufacturer D&L Industries will begin this week a general offer to acquire for P6 a share all shares of affiliate Chemrez Technologies Inc. that it does not own yet, taking the first step toward the consolidation of the two Lao family-controlled enterprises.

In a disclosure to the Philippine Stock Exchange on Monday, D&L said the tender offer period would start on Sept. 4 and end on Oct. 3.

Due to the intended acquisition by D&L of at least 35 percent of the equity shares of Chemrez, D&L is conducting this general offer for all the Chemrez shares, to meet the mandatory tender offer rules and requirements of the Securities and Regulation Code of the Philippines.

D&L intends to acquire 850.39 million common shares of Chemrez, representing about 65.3 percent of the latter’s issued and outstanding common shares.

The transaction is seen costing D&L P5.1 billion, assuming all other shareholders accept the tender offer.

The plan is to consolidate Chemrez into D&L by the fourth quarter of this year.

Chemrez’ size in terms of revenues and market capitalization is said to be not large enough to attract sufficient attention from investors, which the controlling shareholders believe was to blame for lackluster trading and stock market “mispricing.”

At the same time, the acquisition is seen as an opportunity for D&L to broaden its portfolio and attain its aspiration to reach $1 billion in market capitalization.

The board of D&L has approved the financing of this acquisition with the remaining P2 billion in cash from proceeds of D&L Industries’ initial public offering in December 2012.

This amount has been earmarked for acquisitions and investments.

Chemrez is seen delisting from the Philippine Stock Exchange if the public ownership falls below the 10 percent minimum level required by the local bourse for continuing listing.

From a traditionally resin and powder coating-based company, Chemrez now has various lines of environment-friendly and biodegradable products made from renewable and sustainable raw materials. Doris C. Dumlao