Puregold merger is approved

Date : 28 November 2017

The Securities and Exchange Commission (SEC) has approved a deal that will lead to the merger of Puregold Price Club (Puregold) and three acquired grocery chains in the Philippines.

The deal...

Under the deal, Puregold will issue paid-in capital of up to PHP922.7m (US$10.9m), and also pay for PHP14.5m (US$287,855) common shares. The merger will see the three Estenso Equities supermarket companies, Daily Commodities, First Lane Super Traders and Goldtempo Company, consolidated and their stores converted and rebranded into Puregold banners. This will add 17 grocery stores to Puregold's existing portfolio, in Cabanatuan City and in the provinces of Rizal, Bulacan and Aurora.

The approved merger follows Puregold’s acquisition of five B&W (Black & White) stores in Roxas City, Capiz, which has expanded its store presence in the Western Visayas region. At the end of September 2017, Puregold group had 352 stores nationwide: 291 Puregold stores, 13 S&R membership shopping warehouse, and 31 S&R New York Style quick service restaurants, nine NE Bodega supermarkets and eight Budgetlane supermarkets.

Our view

It will be interesting to see how quickly Puregold can fully convert and integrate the 17 BudgetLane stores. The merger may slow down other expansion projects in the short term, but Puregold's stronger consistency across its network and an ability to cover a wider market with increased presence will help support overall growth of the company.