Puregold, S&R merge via P16.5-billion share swap deal

MANILA, Philippines - Puregold Price Club Inc., the nation’s second largest retailer, will acquire the upscale S&R Membership Shopping club via a share swap deal valued at P16.5 billion, a move that will consolidate Chinese-Filipino businessman Lucio Co.’s retailing businesses into one basket.

In a disclosure to the Philippine Stock Exchange yesterday, Puregold said it would issue 766.41 million shares to S&R operator Kareila Management Corp. at P21.50 each, or 450 shares for every Kareila share in exchange for 100 percent of S&R.

Puregold said the issue price was based on the last trading price of the shares of the company as of March 26.

Upon completion of the transaction, the Co family will own approximately 77 percent of Puregold’s outstanding shares.

Punongbayan and Araullo, a member-firm of the Grant Thornton International, has provided a fairness opinion on the acquisition, which is subject to the approval of Puregold’s shareholders.

The planned consolidation will expand Puregold’s current market base, enhance shareholder value, and achieve economies of scale.

S&R currently has six branches located in Bonifacio Global City, Alabang, Congressional Ave. in Quezon City, Aseana-Baclaran, Cebu and Pampanga.

Puregold, on the other hand, opened 38 new stores in 2011, boosting its branch network to 100. In January, the company opened a branch in La Trinidad, Benguet and intends to open 24 more for the rest of the year.

Puregold plans to double the number of its stores by 2015 as it penetrates new markets in the Visayas and Mindanao.

The retail market is dominated by companies such as SM Supermarket/SM Hypermart, Puregold/S&R, Robinsons/Big R and Rustans/Shopwise.

Modern convenience stores have also been expanding to capitalize on the strong consumer demand, as growth in this segment is also due to a robust business process outsourcing (BPO) industry.

From its first store on Shaw Blvd. in 1998, Puregold has grown leaps and bounds to serve over two million households. It debuted on the stock exchange in October last year, raising P7.5 billion from the sale of 600 million shares.