The MOU was finalized following extensive negotiations. Previously, both RFM and CCBPI confirmed discussions were taking place but said that no agreement had been reached. The transaction puts an enterprise value of P15 billion for 100 percent of Cosmos. ING Barings is acting as financial advisor to RFM for this transaction.
The parties are targeting to sign the definitive sale and purchase agreement by the second week of September following a 30-day due diligence process. As Cosmos is a listed company, the shares acquisition transaction will be executed through the Philippine Stock Exchange. The buyer will make a tender offer to the minority shareholders at the same Cosmos share price given to RFM, in accordance with the rules of the Securities Regulation Code.
RFM president and CEO Jose A. Concepcion III said "we selected the offer from CCBPI/TCCC as it provides the best returns to the shareholders of Cosmos and RFM. CCBPI will be acquiring the most profitable and fastest growing company in our group, as well as in the country’s softdrinks industry, with strong homegrown brands such as Pop Cola and Sarsi Rootbeer."
Concepcion added that "we have said in the past that while we have not put Cosmos up for sale, strategic and financial investors have recognized its outstanding operating and financial track record and continued to approach us seeking to invest in the business. The acquisition allows CCBPI to further strengthen its position as the market leader in the softdrinks industry, with brand and product offerings that cater to all income segments of the market."
Concepcion revealed that "whilst selling Cosmos was a difficult decision, the funds received will allow RFM to strengthen its balance sheet in these difficult times, and have excess cash that allows the group to gear up for any economic rebound which hopefully will be in the near future."
He clarified that the unpaid balance due ton RFM’s convertible bond is only $18 million, which can be managed from operating cash flows. The sale of Cosmos was not done for the purpose of repaying the bonds, but will allow RFM to fully repay all its debt and still have a significant cash balance for further acquisitions.
Concepcion expressed optimism that the remaining businesses of RFM, while not currently as profitable as Cosmos, offer strong growth prospects. It is RFM’s intention to develop these businesses, with particular emphasis on ‘branded’ and value added products – Selecta milk drinks and ice cream, Sunkist Juice drinks, Swifts chicken and meat products, White King cake mixes, Fiesta pasta, Butterfresh Margarine and others. RFM intends to focus on these areas for which it is known and has an established and sustainable competitive edge.
Concepcion said that "while we have sold a good business, we have not sold our entrepreneurial spirit and skills. We are confident we can build another Cosmos, just like we have built Selecta, Swifts, White King, Psi Technologies, Consumer Bank and others. We are here to stay and there is definitely life after Cosmos."