SMC agrees on P14-B price for Cosmos

Food and beverage conglomerate San Miguel Corp. and The Coca Cola Co. have finally agreed to purchase the controlling 83.2 percent interest in RFM unit Cosmos Bottling Corp. for P14 billion.

RFM president and chief executive officer Jose Concepcion III told The STAR yesterday that including the cash portion, the purchase price would be around P15 billion. "But if you deduct the expenses, it would be closer to P14 billion," he said.

The signing of the final purchase agreement is expected to take place in the next few days, according to Concepcion.

The agreement was reached after both parties met yesterday to finalize what is said to be the country’s biggest corporate takeover.

When asked how the management set-up will look like after the acquisition, Concepcion declined to comment, saying that it is now up to San Miguel.

Coca-Cola’s purchase of Cosmos would seal the former’s dominance in the Philippine beverage industry, since Coke will now have control of about 90 percent of the market. Coke currently controls 60 to 65 percent of the $1billion local softdrink market while Cosmos accounts for 20 to 25 percent. PepsiCo Inc. accounts for the remaining 10 percent.

SMC-Coca-Cola and Cosmos earlier agreed on a P15 billion purchase price but this was trimmed down to P14 billion following a due diligence audit conducted by the former. The P14 billion purchase price translates to P5.80 per share.

The suspense over SMC-Coca-Cola’s acquisition of Cosmos dragged on for several months, especially after Iloilo Rep. Augusto Syjuco, who used to own Jaz Cola and later sold his bottling plants to Cosmos, questioned the proposed deal.

However, since shares in Cosmos, and not the assets, are the ones being sold to SMC, legal experts said there was no basis to stop the sale.

SMC’s purchase of Cosmos follows its earlier acquisition of the Ayala group-owned Pure Foods Corp. which has now made San Miguel Foods a powerhouse in the poultry business as well as in the canned meat sector.

The acquisition of Pure Foods by SMC is now forcing Swift Foods, Inc., another RFM unit, to look at partnerships with other players, like Vitarich Corp. and Foremost Farms of beer and tobacco magnate Lucio Tan.

There are also reports that San Miguel has expressed interest in Tanduay, owned by Tan, although both camps have been denying it. But an SMC official told The STAR that the interest in Tanduay has always been there.