Retail marriage: Puregold to acquire S&R

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A merger will allow the 2 retail firms, which are both controlled by businessman Lucio Co, to address all income segments

MANILA, Philippines – Supermarket chain Puregold Price Club Inc. is set to acquire upscale retailer S&R Membership Shopping through a P16.5 billion share swap.

A merger will allow the 2 retail firms, which are both controlled by businessman Lucio Co, to address all income segments: Puregold is a supermarket is aimed at the low-and-middle-income market, while S&R, modeled after the warehouse membership shopping chains in the United States, targets the upper middle class market.  

In a disclosure to the Philippine Stock Exchange on Wednesday, March 28, Puregold, the country’s second largest retailer, said it will issue 766.41 million common shares at P21.50 apiece to acquire 100% of Kareila Management Corp., the operator of S&R.

The share swap will be for a ratio of 450 Puregold share for every one Kareila share.

Upon completion of the transaction, the Co family will own approximately 77% of outstanding shares in Puregold.  

The transaction will be presented to stockholders for approval in its annual meeting on May 8.

The Puregold-S&R merger talks started in February.

“With both the [Puregold] and S&R stores, the company will have a complete offering of hypermarkets, supermarkets, discount stores and now membership clubs, and will cover the entire spectrum of consumers in the Philippines,” the listed company said.

“In addition, [Puregold] believes that the acquisition will be earnings accretive in the coming years,” it added.

S&R’s total revenues hit 6.6 billion in 2011, an improvement of 61 percent from the prior year’s P4.1 billion, driven by the full year operations of the new store in Cebu as well as same store sales growth of about 39 percent. It posted a net income of P660 million.

At end-2011, S&R had approximately 214,746 paying members across its 6 stores located in Bonifacio Global City; Quezon City; Alabang; Aseana Business Park, Paranaque; Cebu and Pampanga.

The S&R business was originally established in the Philippines in 2000 as a joint venture controlled by US company PriceSmart.  Following a sale of PriceSmart’s stake in the joint venture its partners in 2005, the business was subsequently acquired by the Co family in 2006. –

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