Macay Holdings declares property dividend of ARC Refreshments

Macay Holdings [MACAY 6.00, up 3.6%; 90% avgVol] [link] board voted to declare a property dividend of ARC Refreshments (ARC) shares to MACAY shareholders worth P2.15 billion. The dividend will distribute 1 billion ARC shares to MACAY shareholders at an entitlement ratio of 0.963 ARC shares for every 1 MACAY share owned. The board announced a record date for this dividend of October 23, 2023, but did not indicate a payment date. It was also not clear whether the MACAY board intends this distribution to be an IPO by way of introduction for ARC, where ARC would be publicly traded after the distribution, or whether the distribution would involve shares of ARC as a private company.  MACAY is owned by Alfredo Yap, and recently purchased the global rights to the RC Cola brand.

 

MB bottom-line: Everything about this suggests to me that this will be a listing by way of introduction (LBWOI) for ARC, just like how we saw Liberty Flour Mills [LFM 14.14 unch; 67% avgVol] distribute shares in its subsidiary, LFM Properties [LPC 0.06, down 6.6%; 48% avgVol], that resulted in LPC’s listing on the PSE. Of course, a listing of this type (if it does come to pass) invites all sorts of monkey business, as we’ve seen with every listing of this type going back to Altus Property Ventures [APVI 9.30, down 4.8%; 152% avgVol] back in 2020. The weird rules that the PSE maintains for LBWOIs, like the lack of a price floor or a price ceiling, seem irrational on their face and similarly don’t hold up under closer scrutiny, but that’s the way things are. These transactions go off like chaotic fireworks and fill the first-day sky with an amazing spectacle of sights and sounds, but usually result in massive red-text hangovers for buyers that get in during the mania hoping to flip for a quick profit. Even for LPC, it was up over 92% on its first day of trading, but now, just 9 months later, it’s down almost 50% from its IPO price. I’m all for getting more companies to be traded, and I’m definitely in favor of spin-offs to allow for more granular investing, but I do not know why the PSE likes to maintain the LBWOI rules the way that they are. Don’t get me wrong, I’m always entertained, but it feels like the kind of dark entertainment that one can get from watching a YouTube supercut of brutal skateboarding falls.

---

Merkado Barkada is a free daily newsletter on the PSE, investing and business in the Philippines. You can subscribe to the newsletter or follow on Twitter to receive the full daily updates.

Merkado Barkada's opinions are provided for informational purposes only, and should not be considered a recommendation to buy or sell any particular stock. These daily articles are not updated with new information, so each investor must do his or her own due diligence before trading, as the facts and figures in each particular article may have changed.