Robinsons expects approval of P18-billion takeover of Rustan’s stores

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  • Robinsons Retail Holdings Inc., the retail arm of the Gokongwei family, said it expects the government to approve the P18-billion acquisition of Rustan Supercenters Inc. from Hong Kong-based retailer Dairy Farm International Holdings Limited over the next four to six months.

    Rustans Supercenters, a company established by the Tantoco family and currently led by pan-Asian retailer Dairy Farm, is the company behind Rustan’s Supermarket, Shopwise Hypermarket, Wellcome and other chains of stores.

    RRHI said in a disclosure to the stock exchange it was expecting to obtain all conditions needed to close the deal including shareholders approval of issuance of primary shares to Dairy Farm, approval of the transaction by the Philippine Competition Commission and confirmation by the Securities and Exchange Commission.

    RRHI earlier announced a deal with Dairy Farm to build a leading food retail business in the Philippines. 

    Under the plan, RRHI will acquire Dairy Farm’s 100-percent stake in RSCI. In exchange, Dairy Farm will acquire new shares in RRHI equivalent to 12.15-percent stake in the enlarged share capital of the Gokongwei-owned retail holding firm at an agreed price of P94 per share or for a total of $346 million.

    Dairy Farm will also acquire a 6.1-percent stake in RRHI from the existing controlling shareholders at $174 million. 

    This will give Dairy Farm total holdings of 18.25 percent in RRHI, while the Gokongwei family will continue to hold a 51-percent interest.

    RRHI’s main formats are supermarkets, department stores, do-it-yourself stores, drugstores, convenience stores and apparel stores.  It also has a minority interest in Robinsons Bank. 

    Rustans Supercenters is one of the Philippines’ leading food retailers operating a diverse brand portfolio of formats. The combined group will be one of the top three retailers in the Philippines with over 1,700 stores.

    Dairy Farm will have two board seats in RRHI once the transaction is completed.

    Dairy Farm said it expected to fund the investment through a combination of existing cash and borrowings.

    Rustans Supercenters reported total sales of P22 billion ($440 million) and operated 12 hypermarkets and 61 supermarkets in 2017.

    RRHI’s sales reached P115 billion ($2.3 billion) and operated 1,718 retail stores in the Philippines, including 154 supermarkets, last year.

    Dairy Farm said the new partnership would combine strong local knowledge with the international strength and experience of a leading pan-Asian retailer. 

    Dairy Farm said it would maintain its strong presence in the Philippines and contribute to the growth of the consumer market with better products, services and experiences.

    “We are delighted to be increasing our investment in the fast-growing Philippine food retail sector in partnership with Robinsons Retail and the Gokongwei Family. Rustan Supercenters and Robinsons Retail are already leading high-quality retailers in the Philippines and we believe that our customers will benefit from being serviced by a larger group that can use its combined strengths and scale to improve competition, quality and value for them. The partnership combines two strong, experienced and talented teams, who will have access to increased future opportunities,” Dairy Farm group chief executive Ian McLeod said. (J.B. Austria. TMS)

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