In a joint disclosure to the Philippine Stock Exchange, officials of the two listed firms said the acquisition was in view of the ongoing labor strike at SFI’s meat processing plant in Cabuyao, Laguna since November last year, which has prevented the company from carrying on its manufacturing business, as well as the marketing, distributing and selling of its products.
"Taking cognizance of the prevailing situation in its subsidiary SFI, and to further strengthen its Branded Food Group, RFM Corp. had deemed it best to directly engage in the business of processed chilled and canned meat products, by acquiring SFI’s corollary business of marketing, distributing and selling of processed chilled and canned meat products," the officials said.
The core Branded Food Group conducts all the branded businesses of RFM (including manufacturing, marketing, distribution and selling which includes White King flour mixes, Fiesta Pasta, Sunkist juice and powder drinks and the Selecta Moo milk drinks.
"The inclusion of branded processed chilled and canned meat products to the Branded Food Group is expected to result in substantial synergies, cost efficiencies and better coordination/integration of the brand-building efforts of RFM," the officials added.
Effective Oct. 1, 2002, RFM has taken over the meat processing business of SFI including all rights, interests and ownership of SFI over assets except its parcel of land and the manufacturing plant.
The transfer does not include hard assets like land, equipment and trademarks but only specific working capital assets such as trade receivables and inventories with the approximate value of P271 million.
In exchange, however, RFM will assume certain trade payables of SFI also in the approximate amount of P271 million.
With no plant and equipment transferred to RFM, the officials said the company will engage the services of its business partners for the production of processed meat and canned meat with third parties in the same way that it has done so on its other products such as pasta and juice, although the Branded Food Group will market, sell and distribute the said products.
SFI, meanwhile, will focus on the poultry business since it is still finalizing its business plan.
The company said earlier its poultry business would continue to accelerate efforts to cut cost and improve on its production yields and operational productivity.
"It is in the middle of shifting a good part of its production capacities to low-cost producing regions like Mindanao and Cagayan Valley. It is also currently developing further its high value-added product lines like marinated cut-ups and lean meats, as well as exportable product lines," the officials pointed out.
As a holding company, RFM Corp., controlled by the Concepcion family, has interest in various food and drink businesses such as processed meat, flour, noodles, bottled water, ice cream and dairy products, milk and juice, as well as in franchising, property development and financing.
Over the past three years, the company has sold off some of its profitable units led by softdrink subsidiary Cosmos Bottling Corp., banking arm Consumer Savings Bank, the Nasdaq-listed technology firm PSI Technologies, and its Tuna division as part of the group’s balance sheet management program and business reorientation program.