Conglomerate San Miguel Corp. and its juice and liquor subsidiary La Tondeña Distillers Inc. have completed the takeover of Sugarland Multi-Foods Corp., maker of the Eight O-Clock brand of powdered juice and water gel for P2.9 billion.
In a statement, SMC said that with the acquisition, the San Miguel group becomes the undisputed leader in the P7.5-billion juice market -- combining Sugarland's 62-percent share and LTDI's 20 percent. Likewise, SMC will absorb the bulk of the lucrative water gel segment, with Jelly Ace's 70-percent share of the total industry.
The buy-out will combine Sugarland's flagship Eight O-Clock juice brand, Jelly Ace gelatin products and Ice-Cold Mix powdered juices with LTDI products, such as Magnolia Fruit Drinks, Magnolia FunChum, Magnolia Junior Juice, ZIP Juice Drinks, Cordial Lime Juice and Magnolia Ice Tea Drinks.
Under the terms, LTDI and SMC will jointly infuse 51 percent and 49 percent, respectively, in fresh equity to purchase the assets of Sugarland. The production and marketing operations of the juice and gel business will eventually be transferred to a new company to be created by the Cojuangco-controlled food and drink conglomerate.
Dutch financial powerhouse ABN-Amro provided the valuation of the sale while FEB Investments Inc. acted as arranger and financial adviser.
SMC president Francisco Eizmendi said the acquisition of Sugarland, which is expected to turn in revenues of P2.4 billion this year, "is clearly in line with management's thrust of pursuing opportunities that provide strategic fit with its businesses."
Last year, LTDI acquired Metro Bottled Water Corp. from Metro Pacific Corp. for P1.2 billion, giving it the clear edge in the entire bottled water industry with a 54-percent market share. The company consolidated its brand (Viva Mineral Water and First Distilled Drinking Water) with the acquired Wilkins Distilled Drinking Water brand.
For its liquor business, LTDI's market share improved to 52 percent in 1999 from 50 percent a year ago as the introduction of two new variants (San Miguel Bravo Rum and Ginebra San Miguel Blue) further boosted sales volume.
In the first two months, LTDI's sales revenues jumped 38 percent from P2.2 billion while net income went up 2.5 times to P260 million, as the liquor business, the main contributor to the company's revenues, posted hefty volume increases. Last year, LTDI reported a 96 percent increase in profit to break past P1 billion, from P515 million the previous year due to higher revenues and improved operating efficiencies. -