PCC gives go-ahead to Lotte Chilsung’s acquisition of Pepsi Philippines
MANILA, Philippines — Antitrust authorities have cleared the acquisition of Pepsi-Cola Products Philippines inc. by a Korean beverage maker, putting the companies a step ahead to completing the transaction.
In a decision dated March 26, the Philippine Competition Commission (PCC) said that after a review of the purchase, it found the buy-out of Lotte Chilsung Beverage Co. Ltd. of the local manufacturer of Pepsi products "will not likely result in substantial lessening of competition."
"Moreover, the transaction will not likely give the parties an increased ability of incentive to engage in input and customer foreclosure in the global market...and the national market for dustribution of non-alcoholic beverages," PCC said in the decision, a copy of which was posted on its website.
In December 12, Lotte Chilsung, a subsdiary of Korean conglomerate Lotte Group offered to buy 57.78% common shares of Pepsi at P1.95 apiece, for P4.2 billion. If realized, the deal will give Lotte Chilsung full ownership of Pepsi-Cola. Currently, Lotte Chilsung already holds 42.25% of Pepsi-Cola shares.
The transaction size fell comfortably above the old threshold for mergers and acquisitions of P2.2 billion, which requires PCC to examine deals before proceeding to ensure market competition is safeguarded.The threshold was raised to P2.4 billion in February.
A publicly-listed company, Pepsi-Cola Philippines also informed the local bourse of the PCC approval on Monday. The beverage maker is the local manufacturer of food and beverage brands such as Pepsi-Cola, Mountain Dew, 7-Up, Mirinda and Gatorade, among others.
PCC called Lotte Chilsung’s move was “a strategic initiative.” On Monday, shares in Pepsi Philippines were up 33.08% to close at P1.73 each.
While Lotte Chilsung earlier said it had no plans to de-list Pepsi Philippines from the local bourse once acquired, the transaction has effectively diluted Pepsi-Cola's public ownership which under Philippine Stock Exchange rules should be at least 10% for the company to remain listed.
The PCC reviews mergers and acquisitions that would likely pose risks to market competition, an environment that regulators believe benefits consumers through lower prices and better services.
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