PEPSI-COLA PRODUCTS Philippines, Inc.’s biggest shareholder wants to increase its stake.

By Denise A. Valdez, Reporter

PEPSI-COLA Products Philippines, Inc. (PCPPI)’s biggest shareholder Lotte Chilsung Beverage Co. Ltd. wants to increase its stake in the company, which is seen to possibly lead to an eventual delisting from the local bourse.

In a tender offer report by Lotte submitted to the stock exchange Wednesday, the food and beverage company said the Korean conglomerate wants to buy up to 2,134,381,838 of its common shares through a tender offer to all shareholders except Lotte Corp. and members of the board of directors.

Lotte is offering to buy the shares at a tender offer price of P1.95 each. The shares are equivalent to 57.78% of PCPPI’s total issued and outstanding capital stock as of end-September.

PCPPI has an authorized capital stock of P750 million as of end-November, which is divided into five billion shares of common stock priced at P0.15 each.

Based on the tender offer report, the offer will begin at 9:00 a.m. today and will last until 5 p.m. on Jan. 15.

Lotte said it views the tender offer as “a strategic initiative to acquire a significant economic interest in the company.”

On the possibility of delisting PCPPI, Lotte said it has no plans to voluntarily delist the firm from the Philippine Stock Exchange (PSE). But it noted if the tender offer is accepted, the company’s public ownership may shrink to below 10%, which is the current minimum public float in the Philippines.

“In the event that PCPPI will no longer be compliant with the minimum public ownership requirement following the completion of the Tender Offer, trading of PCPPI shares will be automatically suspended by the PSE for a period of six months and, if during the said period, PCPPI is still not able to comply with the minimum public ownership requirement, then delisting will follow thereafter,” it said.

“If PCPPI is delisted, its common shares will no longer be traded on the PSE and this could affect investors’ ability to liquidate their investments. Also, any capital gains generated from their subsequent sale or transfer will be subject to the prevailing capital gains taxes. Subsequent sale or transfer will also be subject to documentary stamp tax,” it added.

Following the announcement, PCPPI voluntarily suspended the trading of its shares at the stock exchange yesterday. The trading suspension will be lifted at 1:40 p.m. today.

As of its end-September regulatory filing, PCPPI said Lotte had a 42.22% stake in the company, accounting for the biggest share. The other shareholder is Quaker Global Investments B.V. (25%) which is registered in the Netherlands.

In a separate disclosure yesterday, PCPPI said it has successfully closed its franchise deal to manufacture the local version of snack brand Cheetos.

This follows the company’s announcement in September that it wants to focus on its beverage business through its exclusive relationship with PepsiCo, Inc.

“Successfully reaching this agreement allows PCPPI to advance and renew its focus and commitment to a more sustainable future, while optimizing and strengthening the production and distribution of carbonated and non-carbonated beverages to millions nationwide…,” it said in a statement Wednesday.

Among the beverages PCPPI owns are Pepsi, Mountain Dew, 7-Up, Mirinda, Mug, Gatorade, Tropicana, Lipton, Sting, Premier, Milkis and Aquafina.

Despite terminating the franchise for Cheetos, the company noted it will still import the said product, along with other snacks such as Lays, Doritos, Ruffles, Red Rock Deli, Fritos, Tostitos, Sunchips, Smartfood, Munchies and Rold Gold.

Before the suspension of its trading, shares in PCPPI closed Tuesday’s session at P1.40 apiece.

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