MPAV finalizes deal to own 34.76% stake in Axelum

Some payments tied to profitability goals

METRO PACIFIC Agro Ventures (MPAV), a subsidiary of Metro Pacific Investments Corp. (MPIC), has finalized a deal to acquire a 34.76% stake in Axelum Resources Corp., a food manufacturing company that exports coconut products, with some payments contingent on achieving specific financial goals.

The agreement, initially announced in February, is seen to fortify the Metro Pacific group’s foothold in the Philippine agriculture industry.

In a regulatory filing on Wednesday, Axelum said that both companies agreed to extend the settlement of MPAV’s P5.32-billion subscription agreement until January 15, 2024.

In February, MPIC announced that it was acquiring a 34.76% stake in Axelum for P5.32 billion through its subsidiary MPAV, mainly to strengthen its presence in the local agriculture industry.

MPAV planned to acquire 1.19 billion common shares and 200 million redeemable preferred shares in Axelum.

While the total highest consideration for the transactions remains at approximately P5.32 billion or P3.83 per share, the basis for payment has undergone changes, MPIC parent company First Pacific Co. Ltd. said in a statement on Monday.

The payment structure now involves installments, with an initial payment of P3.37 billion due on or around Dec. 22.

Additional payments are contingent upon the “achievement of certain EBITDA (earnings before interest, taxes, depreciation, and amortization) milestones up to the original purchase price under the original SPA (sale purchase agreement),” First Pacific said.

First Pacific noted that these amendments resulted from “arms’ length negotiations,” emphasizing the parties’ commitment to a transparent and equitable agreement.

The company added that “for the avoidance of doubt,” a payment of P500 million will be issued for the redeemable preferred shares of Axelum on or around Dec. 22.

Axelum Resources Corp. expressed optimism for the partnership, emphasizing a shared vision to modernize the local coconut industry. 

“This partnership is built on a shared vision and profound commitment to spearhead initiatives that will modernize our local coconut industry. We aim to achieve this by leveraging our joint expertise, network and resources,” said Axelum Chairman and Chief Executive Officer Romeo I. Chan.

For his part, MPIC President and Chief Executive Officer Manuel V. Pangilinan said: “Axelum’s expertise in the coconut industry, combined with MPAV’s ambition for Philippine agriculture, position us to make lasting contributions to the nation.”

“We look forward to promoting sustainability and competitiveness in the country’s agricultural sector,” he added.

In terms of financial performance, Axelum recently reported a net loss of P428 million for the nine months ending in September, a reversal from the P717.28-million net income recorded in the same period the previous year.

The company’s top line also saw a 19% decline, dropping from P5.31 billion to P4.28 billion.

Axelum shares closed 3% higher at P2.40 apiece on Wednesday.

MPIC is one of three key Philippine units of First Pacific, the others being Philex Mining Corp. and PLDT Inc.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls. — Adrian H. Halili