La Tondeña to merge water, juice units

La Tondeña Distillers Inc. (LTDI), the liquor and juice subsidiary of the San Miguel group, will integrate its acquired companies into a single unit in preparation for the planned spin-off under Coca-Cola Bottllers Philippines Inc. (CCBPI).

In a disclosure to the Philippine Stock Exchange, SMC corporate information officer Ferdinand Constantino said the LTDI board of directors had approved the merger of Sugarland Beverage Corp., Metro Bottled Water Corp. and SMC Juice Inc. into LTDI, which will be the surviving corporation.

"The merger will be presented for approval at the special stockholders' meeting to be held on Sept. 14, 2001," Constantino said.

Last March, SMC said it would spin off its non-liquor business into a separate subsidiary under CCBPI. Together with the Atlanta-based The Coca-Cola Co. (TCCC), the fold-in will involve the water and juice brands of LTDI, a 67-percent subsidiary of SMC.

The local Coca-Cola units is jointly owned by SMC and TCCC, with a 65 percent and 35 percent interest, respectively.

The deal, expected to be finalized by the fourth quarter of 2001, is valued at $141 million net of tax and inclusive of SMC’s 49-percent ownership of Sugarland, the juice unit of LTDI.

Although LTDI’s water and juice segments contribute 27 percent to total revenues, the company remains anchored on its hard liquor line which is its solid growth driver making up 73 percent of total sales.

"The sale of our non-liquor beverage business to CCBPI allows us to focus our resources and direct our capital and attention on our core and hard liquor and related businesses," LTDI president Enrique Gomez Jr. said.

LTDI’s wines and spirit line boast of the flagship Ginebra San Miguel, Añejo Rum, Vino Kulafu, Tondeña Manila Rum, Oxford London Dry Gin, San Miguel Bravo Rum and Cordial Lime Juice.

Meanwhile, LTDI will give up the Magnolia brands of fruit drinks, Zip Juice Drink, Eight O’Clock, Ponkana, Ice Cold Mixers and the bottled water brands Viva!, First and Wilkins.

The integration of the non-liquor brands into CCBPI will be further boosted by the impending acquisition of Cosmos Bottling Corp., the country’s second biggest softdrink company, with the addition of the Sarsi, Pop Cola, Cheers and Jolt brands.

The board of directors of RFM, parent company of Cosmos, had approved in principle the sale of its entire 83.2-percent stake in the softdrinks company to SMC and TCCC, although details of the deal including the acquisition price and structure, have not yet been finalized.

The SMC board, in turn, had authorized its management to continue the discussions, under certain prescribed parameters, with TCCC and RFM for the joint acquisition of Cosmos by CCBPI and TCCC.