MANILA, Philippines - Supermarket chain Puregold Price Club Inc. is acquiring S&R Membership Shopping via a share swap deal worth P16.5 billion.
In a disclosure to the Philippine Stock Exchange, Puregold said its board has approved a plan to issue a total of 766 million new shares to Kareila Management Corp., the company that owns and operates S&R, at P21.50 per share.
In exchange, Puregold will get 100% of Kareila. Both Puregold and Kareila are owned by the family of Lucio Co.
The deal will allow Puregold, which caters to the affordable market segment, to diversify its consumer base. S&R has six membership stores nationwide serving the AB and upper C markets. S&R has over 214,000 paying members.
"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. In addition, Puregold believes that the acquisition will be earnings accretive in the coming years," the company said.
In 2011, S&R posted revenues of P6.6 billion, up 61% from P4.1 billion in 2010, driven by the full-year operations of its new store in Cebu as well as same store sales growth of about 39%.
Puregold, on the other hand, has over 100 stores nationwide with earnings of P1.54 billion last year, triple their P510.37 million income in 2010.
Puregold earlier said it was embarking on an aggressive expansion program to double its store network by 2015.