URC mulls sale of more shares due to strong demand

Universal Robina Corp. (URC), the food manufacturing unit of JG Summit Holdings Inc., may sell more shares to the public after the recent secondary share offer drew strong demand from global institutional investors.

URC said the demand for the offering was in excess of the total 634.78 million shares sold in both the local and international markets. The shares were sold at P17 a share or a discount of 8.8 percent from the closing stock price of P 18.50 last Monday.

In a disclosure to securities regulators, URC said its sole international underwriter, UBS Investment Bank, has 30 days to execute an overallotment option of a further 95,217,400 secondary shares.

Of the total 634.78 million shares, 97.5 percent was offered in the international market.

Assuming the greenshoe option is implemented, URC will raise about P12.41 billion from the offering.

Upon completion of the offering, URC’s free float will increase to 40.8 percent or about $300 million. Parent company JG Summit remains a long-term majority shareholder owning 59.2 percent.

Trading in URC shares has been suspended since Tuesday and will resume on Tuesday next week when the new shares are scheduled to be listed.

Proceeds from the offering will go to the continued expansion of URC’s branded consumer food operations primarily in a multi-product beverage line in PET bottles in the Philippines as well as international markets particularly China and Vietnam.

Other proceeds will be used for the expansion of its raw milling capacity and a new sugar refinery, and the purchase of additional machinery and equipment for URC’s agro-industrial division.

The offering is in line with a long-term strategy to unlock the value of JG Summit’s listed subsidiaries by enhancing trading floats, diversifying shareholder base, and boosting market capitalization.

With sales of C2, its green-tea based drink, reportedly outpacing that of Coke’s as consumers prefer healthier drinks like bottled mineral water and juices over soda, the company is planning to build six local production lines here and one beverage plant overseas.

URC’s regional export and international manager Carlo Villaraza said the company is also looking to penetrate other countries like South Korea, Australia and New Zealand in line with its goal to become a major player in global markets.

URC manufactures branded consumer foods like Jack & Jill snacks, Great Taste coffee mixes, Cloud 9 and Nips chocolates, Magic Flakes biscuits, XO and Maxx candies, Payless and Nissin noodles, and Hunts canned products and sauces, among others.

Villaraza said the company is also keen on entering the United States but on how and when it plans to do so is still under review. "This is something that needs further study because the market is so big. For the meantime, we’d like to concentrate on Asia. Our objective is to make Jack & Jill a major brand in Asia."

Villaraza said the company has already entered Japan through its Magic Flakes biscuits. It has also invaded Taiwan, offering its candies and biscuits.

URC has production facilities in Thailand, Malaysia, China, Indonesia, and Vietnam and sales/marketing offices in Hong Kong and Singapore.

URC is currently the market leader in biscuits in Thailand. In Malaysia, it continued its aggressive growth anchored on its leading positions in coated nuts, potato chips and chocolates.

In addition, the company produces hogs and day-old chicks and manufactures animal and fish feeds, glucose and veterinary compounds.