Bayanihan 2, year 1: A year of acquisitions

As it turned out, 2021 was a year of multi-billion peso acquisitions for some Philippine companies.

What a year it was indeed for some tycoons and the companies they lead, and as they enjoy the last days of their holidays – some of them are abroad such as in the US, Europe, Canada, and even in a French-speaking Caribbean island – perhaps they can’t help but savor their accomplishments despite the challenging environment of 2021.

It was quite a feat after all as they quietly expanded their companies’ portfolio by buying legacy brands and some family-owned stores in the provinces, taking advantage perhaps of pandemic valuations and sellers who wanted to cash-in amid the uncertainties.

No Ligo boycott for Chris Po

Chris Po, for instance, quietly embarked on a shopping spree just before the close of the year, with the Po family buying Ligo Sardines and Potato Corner.

Others are wondering why the Tung family, maker of Ligo, sold the 60-year-old legacy brand.

Some said the sardines maker may have been affected by the #BoycottLigo calls that spread on social media in April 2020, when one of its owners, Mikko Tung, said the company was coursing its donations directly to NGOs and hospitals because it did not trust the government.

But did the boycott actually happen? Or did it affect the company’s financials?

I don’t think it did because Filipinos, rich or poor, simply love sardines. And the majority of the consumers, perhaps, don’t really care much about politics. According to a 2017 survey by the Social Weather Stations, sardines are a comfort food for Filipinos and that three out of 10 Filipinos eat sardines at least once a month.

Ligo’s profits

In any case, I checked Ligo’s latest available financials to see whether they were making profits and here’s what I gathered:

Ligo turned in a profit in the last three years, even higher in 2020: P20.3 million in 2018, P21 million in 2019 and P34.3 million in 2020.

Ligo’s total assets amounted to P3 billion in 2020 and 2019, higher than the P2.8 billion in 2018.

It’s a good brand and a win for the Po brothers. The price has yet to be disclosed because of an NDA, Leo Po told me when I asked about the price.

Consumers mostly reacted positively to news of the acquisition, simply expressing hopes that the Pos will maintain the quality of the brand.

Aside from Ligo, Po-led Shakey’s Pizza also acquired Potato Corner, one of the leading food kiosk brands in the country, co-founded by businessman Jose Magsaysay.

Like most food service businesses in the country, Potato Corner took a blow during the pandemic. Yet, despite challenging circumstances, the business demonstrated resilience, posting profitable returns.

Vicente Gregorio, president and CEO of Shakey’s, said Potato Corner is a bankable addition to the company’s roster of brands.

The Po brothers beat other tycoons to Potato Corner because industry sources said there were others, including an even bigger tycoon, who had previously expressed interest in the brand, but was not able to get it.

Air21

The Ayala Group had its own mammoth buy when it signed an agreement in November to acquire a 60 percent interest in Alberto Lina’s Air21 Holdings for P6 billion.

I speculate that the MVP Group of tycoon Manuel V. Pangilinan, which earlier acquired a 12 percent stake in the companies under Air21 Holdings, may later on decide to sell to the Ayala Group. At present, the MVP Group is a minority shareholder in roughly five of the eight companies under the holding company.

Ayala president and CEO Fernando Zobel de Ayala  has said the partnership with Air21 Holdings gives AC Logistics an end-to-end logistics platform that is capable of serving the diverse supply chain requirements of high-growth industries and complements Ayala’s initial foray in logistics through Entrego.

Pharmaceuticals

Property tycoon Edgar “Injap” Sia II also expanded his group’s footprint in the pharmaceuticals sector.

His supermarket chain MerryMart Consumer Corp. acquired Mindanao-based Cecile’s Pharmacy, a 57-year-old pharmacy chain, after its acquisition of Carlos Drugs-Lucena Inc., a Lucena-based drugstore chain.

Other mammoth acquisitions

Another mammoth acquisition was by Universal Robina Corp. which gobbled up a biscuit company in Malaysia for roughly P22.9 billion.

That’s a whopping buy and it shows that the Gokongwei Group, with Lance Gokongwei at the helm, is not afraid to spend its billions despite the group’s legendary “kuripot” tag.

Not to be left behind is Fruitas Holdings Inc. (Fruitas), the listed food and beverage kiosk operator chaired by Lester Yu, which acquired Balai Pandesal last year. The company, which makes good tasting bread, is also set to go public this year.

Bayanihan 2

What a buying spree it was for companies in 2021.

They may have taken advantage of the Bayanihan 2 threshold of P50 billion, which still holds until September next year. The law, supposedly meant to aid in the country’s economic recovery, exempts from the compulsory notification requirement of the Philippine Competition Act all mergers and acquisitions with transaction values below P50 billion if entered into within two years from Bayanihan 2’s effectivity or from September 2020 to September 2022.

I hope the acquired brands can only get better and the workers who toiled to grow the business will be retained. That’s not always the case so we’ll just have to wait and see.

Iris Gonzales’ email address is [email protected]. Follow her on Twitter @eyesgonzales. Column archives at eyesgonzales.com.