In a statement to the Philippine Stock Exchange, SMC said it has agreed with Ayala Corp. on the indicative terms for the acquisition of Pure Foods although they still have to thresh out details of the sales.
"Talks are continuing and the parties have not yet signed a Memorandum of Understanding (MOU). The Board of Directors of the two companies need to approve the terms of the MOU," SMC said.SMC chairman and CEO Eduardo Cojuangco Jr. had indicated that the agreement would be firmed up before or after the company’s annual stockholders meeting scheduled on May 3.
Sources said aside from the valuation, which earlier placed the purchase at between P9 to P10 billion, the two parties are also working on the streamlining of the workforce, including the offer of retirement packages to Pure Foods employees who would be affected by the merger.
Pure Foods, which is 92.6 percent owned by Ayala Corp., directly competes with the SMC Foods Group which consists of poultry and livestock firm Monterey Foods Corp. and meat processors San Miguel Campocarne Corp.
Aside from the meat division, SMC is also reportedly taking in Pure Foods’ other businesses that include the poultry, livestock and feeds division, the flour division, as well as the Burger King fastfood franchise. The flagship business, however, remains the Pure Foods – Hormel Co. Inc., its joint venture with Hormel Foods International of the US, with its strong presence in the hotdog and canned meat market.
Last year, Pure Foods was one of the growth drivers within the Ayala Group as its net profit went up 22 percent to P888.4 million on consolidated net sales of P12.6 billion.
The addition of Pure Foods, with total assets valued at P8 billion in end-1999, will instill SMC as the undisputed market leader in the country – and one of the biggest in Southeast Asia – in the food and beverage business.
Pure Foods was the fourth major business acquisition of SMC in less than a year, following last year’s purchase of juice maker Sugarland and Australian premium beer brewer J. Boag & Son. Early this year, SMC reacquired the local unit of Coca-Cola to extend its leadership in the soft drinks market.