Cosmos sale finalized this week

RFM Corp., the Philippines’ second largest food conglomerate, said on Monday it expects to finalize the sale of its softdrinks unit Cosmos Bottling Corp. this week.

RFM vice president Ramon Lopez told Reuters the sale would involve the group’s entire 85-percent stake in Cosmos, its cash-cow, either to San Miguel Corp. or US-based PepsiCo Inc.

"The sale price will be valued using Cosmos’s enterprise value," Lopez said in a telephone interview.

Asked to comment on newspaper reports that the RFM Group was seeking P16 billion ($301.89 million) for its stake in Cosmos, Lopez said: "It’s in that range. Our value should be higher than that."

Industry sources have said San Miguel reportedly offered to buy RFM’s stake in Cosmos for P12 billion, but RFM quoted a higher price of P16 billion.

In a late disclosure to the Philippine Stock Exchange on Monday, RFM finally named San Miguel and PepsiCo as the interested buyers of Cosmos.

"We wish to confirm that the company is currently in discussion with both Coke/San Miguel and PepsiCo, but at this time, no agreement has been reached," Lopez said in the disclosure statement.

"We expect to reach a final agreement with one of its parties within this week."

RFM’s decision will end a month-long speculation in the market as to who, between San Miguel and Pepsi, would bag Cosmos, the industry’s second largest soft drinks firm.

San Miguel, if it bags the deal, would reign supreme in the local beverage industry. It just completed the re-purchase of Coca-Cola bottlers Philippines Inc. from coca-Cola Amatil Ltd. for a final ungeared price of A$2.26 billion ($1.13 billion) together with Coca-Cola Co.

Pepsi, which faces decimation if San Miguel wins the deal, has reportedly teamed up with US-based Carlyle group to strengthen its bid for cosmos.

Coca-Cola Bottlers is understood to have around 60-65 percent of total market share, Cosmos around 20-25 percent, and the local operation of Pepsi around 10 percent.

San Miguel-B shares, which are open to foreigners, gained P3.50 to P53.50 on speculative plays following its negotiations with RFM.

San Miguel-A shares added P1 to 43.50.

The main stock index closed up 1.31 points or 0.09 percent at 1,397.61.

RFM closed 28 centavos at P2.50, while Cosmos shed 10 centavos at P4.80.

Analysts have said the San Miguel-Cosmos partnership would be good for both companies as it would boost the former’s leadership and provide the much needed liquidity to cash-strapped RFM.

Traders have said the deal was also positive for RFM, which would get much-needed cash to service its bonds.

In May, RFM defaulted on the redemption of convertible bonds issued by its RFM Capital Ltd. unit totaling $56 million. RFM assured bondholders that the payments would be made in full.

RFM last week reported that it suffered a net loss of P520 million last year.