Puregold about to close deal with supermarket chain

ACQUISITION. Puregold is already in the final negotiations to acquire a grocery chain for about P800 million to P1.4 billion, depending on the final valuation. Image from Wikipedia

ACQUISITION. Puregold is already in the final negotiations to acquire a grocery chain for about P800 million to P1.4 billion, depending on the final valuation.

Image from Wikipedia

MANILA, Philippines – There's another acquisition development this week in the supermarket chain business, as Puregold Price Club Incorporated of Lucio Co-led Cosco Capital Incorporated aims to grow its grocery chain by 50% from 2015 to 2019.

Puregold is already in final negotiations to acquire an unnamed grocery chain for about P800 million ($17.76 million) to P1.4 billion ($31.08 million), depending on the final valuation.

“This acquisition will give us presence where we are not yet heavily represented,” Cosco Capital president Leonardo Dayao said in an interview at the sidelines of the company’s annual shareholders meeting Friday, June 26.

“We hope to close the deal within the year,” he added.

The group eyes to add 125 stores over the next 5 years.

Dayao said the soon-to-be-acquired grocery chain, which currently operates a total of 8 stores, will boost the Puregold’s revenues annually by 4%.

This will also be Puregold’s second acquisition this year after it recently acquired NE Pacific Shopping Centers Corporation, the largest mall operator in Cabanatuan, Nueva Ecija that owns 9 supermarkets.

Only this week, conglomerate SM Investments Corporation (SMIC) said it will sign a deal to acquire majority interest stake in Cherry Foodarama within this month.

Visayas, Mindanao

Puregold has already acquired more than 40 stores in past 2 years, which helped accelerate the company’s store expansion.

Dayao said that for 2015 alone, it is looking to build 25 Puregold stores, half of which will be in the Visayas and Mindanao areas. (READ: Puregold nets P1.05B in first quarter)

As of end-2014, the company operates 232 Puregold stores and 9 S&R Membership Shopping stores.

Dayao said the company has also secured 20 sites for recently launched convenience store chain Lawson in line with its target to open 30 stores this year.

Puregold earlier partnered with Japan’s Lawson Asia Pacific Inc. to build a total of 500 stores over the next five years.

After launching its first Lawson store in Sta. Ana, Manila in March, 3 more outlets have been opened in Baclaran, Cubao, and Pasig.

One Lawson store costs at least P5 million ($110,962.06).

'AyaGold'

In May, Puregold Price Club Incorporated and the Ayala group announced a 50:50 joint venture, and that they are eyeing to open 10 mall-based supermarkets named “AyaGold,” to be located in Ayala Land’s new projects. (READ: Ayala Land to build ‘huge’ shopping mall in Parañaque)

The AyaGold concept will compete with companies operating in the prevailing business model, as Puregold stores have been standalone, catering specifically to the low-end segment, including sari-sari store owners.

Cosco Capital is also building two community malls, one in Laguna and the other in Pangasinan. It is also renovating newly acquired community malls in San Jose City and Baler, Aurora.

It is also rolling out 10 Office Warehouse stores this year to add to existing 47 stores.

Formerly Alcorn Gold Resources Corporation, Cosco Capital was transformed as the listed retail holding unit of Co in 2012 with investments in retail, real estate, and liquor distribution businesses. – Rappler.com

$1 =  P45.06