URC acquires Nestlé waters for P240M

Universal Robina Corp. (URC), the snack food and beverage arm of the Gokongweis’ JG Summit Holdings Inc., has completed its acquisition of Nestlé Waters Philippines Inc. for $5 million (around P240 million).

In a dislosure to the Philippine Stock Exchange, URC said it has also purchased Nestlé’s water source and manufacturing site for about P7.5 million.

URC said the deal, which involves the manufacturing assets and trademarks of Hidden Spring and Nestlé Pure Life, was sealed via the acquisition of all shares of stock of South Luzon Greenland Inc.

Under the agreement, URC will get the license to bottle Nestlé Pure Life, which will remain a Nestlé brand.

Funding for the purchase will come from URC’s internally generated cash.

As of end-September last year, URC’s net cash flow amounted to P3.8 billion.

The transaction is expected to strengthen URC’s position in the fast-growing beverage market in the country and expand its portfolio of non-carbonated brands which now include coffee (Great Taste), tea drinks (C2), sports drinks (Rush), and juices (Nature’s Harvest).

URC has set aside P7.1 billion this year for the continued expansion of its beverage and biscuit lines, flour milling capacity, piggery and feed operations. The programmed capital budget is higher than last year’s P5.5 billion.

Around P5.6 billion of the proposed budget will be used to expand its branded consumer food operations, largely the beverage line, and its presence in international markets such as Thailand, Vietnam and China.

Some P934.8 million will be spent for the expansion of the raw milling capacity and new refinery. The remaining P580.2 million will be used to beef up manufacturing facilities for URC’s agro- industrial division.

URC posted a net income of P3.02 billion in its fiscal year ending Sept. 2006, up 19.4 percent from the previous level’s P2.53 billion on the back of a 12.8 percent increase in sales due to the strong performance of its beverage products like coffee and tea.