After deal, what's next for Max's, Pancake House?

by Jon Carlos Rodriguez,

Posted at Mar 05 2014 05:10 PM | Updated as of Mar 06 2014 05:31 PM

MANILA, Philippines – Max’s and Pancake House will remain as two separate businesses for now despite Max’s Group of Companies' recent takeover of the listed company.

Robert Trota, president of the Max’s Group of Companies, said there are no current plans to consolidate the two brands, quelling talks that the private firm is eyeing backdoor listing at the Philippine Stock Exchange (PSE).

Trota stressed that Max’s pursued the acquisition regardless of Pancake House’s status as a listed food group.

“It was more of a strategic acquisition because we wanted these brands. Whether Pancake was listed or not, we still would have wanted it, it’s not really a factor for us. At this point in time, we will keep the two groups separate, brand them as they are and I think we can still create those synergies as two different groups,” he said in a press briefing on Wednesday.

The Max's group recently completed a tender offer for the publicly held shares in Pancake House, which resulted in the purchase of all 39,976,233 public shares. It also acquired 193,183,967 Pancake House's shares from its former principal shareholders.

The Max's group bought a combined 233,160,200 public and private shares at P15 each, or a total of P3.49 billion.

Pancake House remains compliant with the PSE's minimum public float requirement after the transaction, and will continue to be listed.

According to Trota, the Max’s group will be evaluating if going public will be a viable option in the near future, noting that it has been able to grow its business through the years through franchising.

“We’ve been a very conservative bunch and operating for 70 years. Going into franchising is another way to building the business. When you're listed, you need more equity and funding to grow. That's where franchising comes in, it’s also using other people's money to grow the business and other people's time and organization,” he explained.

Currently, about 60 percent of stores under Max’s group is company-owned while the remaining 40 percent is composed of franchises.

Max's branding director Jim Fuentebella and Max's president Robert Trota

Expansion plans

The buyout now puts 14 brands under the Max’s and Pancake House brand, with a combined store network of 510 stores.

These brands are Max’s Restaurant, Max’s Corner Bakery, Jamba Juice, Krispy Kreme, Pancake House, Yellow Cab Pizza Co., Teriyaki Boy, Dencio’s, Maple, Kabisera, Sizzlin' Pepper Steak, Le Coeur De France, Chicken Rice Shop, and Singkit.

Trota said Max’s will continue its yearly growth of about 10 to 15 stores in the Philippines, with 6 stores soon to open in the Middle East.

For Pancake House, Trota said they are still “in the process of firming up numbers in terms of the growth strategy,” adding that “both brands are positioned for growth.”

Jim Fuentebella, the branding director of the Max’s Group of Companies, meanwhile said that while opening more stores is part of the strategy, the company will mainly focus on improving the services and operating strategies.

“There are stores in the pipeline, but I think the strength of the group now isn’t so much driven by the number of stores that we have, but by growing the stores right,” he said.

He also said the menu and marketing strategy of both Max’s and Pancake House will not change because of the acquisition.

“We know why the brands are so special and why the food is so good. We just want to continue that,” he said.

“It doesn’t make business sense for us to merge all those recipes together. It’s the core of the business that will keep it strong and the recipes that built the core of Max’s will be intact…We are not going to put Max’s fried chicken into the Pancake House stores,” he added.

Fuentebella will also handle marketing strategies for Pancake House.

Trota was named Pancake House Inc. president and CEO, while Sharon Fuentebella was named chairwoman.

They replaced Martin Lorenzo, who was chairman, president and CEO of Pancake House Inc.

Trota shared that he and Lorenzo are good friends and have been in talks since last year.

“When we heard through the grapevine that a minority was selling and that it was a done deal, I was sent out by the family to ask who bought the Pancake House Group. Martin said the minority is for sale, but it’s not yet a done deal. I said, ‘If it interests you, the Max’s Group is interested in acquiring the whole Pancake House,’ and he said he’ll think about it,” Trota said.

Trota said Lorenzo then contacted him in November 2013 and the discussions flourished, noting that Lorenzo's family were also in talks with another buyer.

But being both a patron and competitor of brands under Pancake House, Trota said making the decision to takeover the company was not difficult.

“Max’s has been monitoring Pancake House because they were considered as competitors, we do look at each other. So when the opportunity came about, it just made sense that we go for it,” said Trota.