SM purchase of Goldilocks awaiting PCC approval

Sy family-led conglomerate SM Investments Corp. confirmed yesterday ongoing discussions to acquire a 51-year-old restaurant chain run by Goldilocks Bakeshop Inc.

SMIC told the Philippine Stock Exchange that it was in “preliminary discussions for a possible equity investment, joint venture or other cooperation arrangement with Goldilocks Bakeshop. However, the said potential investment is pending and subject to regulatory approval by the Philippine Competition Commission.”

PCC is the country’s antitrust body mandated under the Philippine Competition Act to review mergers and acquisitions to ensure that these deals will not prejudice the interest of the consumers. The PCC is mandated to review deals valued at P1 billion and above.

“Food is one of the fastest-growing segments or retail in light of Filipinos’ growing affluence,” said April Lee-Tan, research head at leading online stock brokerage COL Financial.

“I think SM’s advantage is their access to data through the malls, so they know which segments are growing the fastest,” Tan said.

Tan said the bakeshop chain had at least a “good branding and an established store network that should make it easier to enter the quick-service restaurant (QSR) business.”

Goldilocks Bakeshop is a profitable enterprise but margins are low due to stiff competition. It is run by the Yee family and has a chain of more than 500 stores. The group also has stores in the US, Canada and Thailand.

According to its latest financial statement, Goldilocks posted net sales of P7.86 billion in 2015, up from P6.85 billion the previous year. Net profit attributable to equity holders of parent firm stood at P225.07 million compared to a restated net profit of P947,267 in 2014. The fast-food chain had P2.89 billion in total assets as of 2015. Goldilocks’ net profit margin of 2.8 percent is relatively low versus market leader Jollibee Foods Corp.’s margin of 5.6 percent.