URC to raise P26 B for purchase of NZ food firm

MANILA, Philippines - Snacks and beverage giant Universal Robina Corp. (URC) plans to raise roughly P26 billion through bank loans or bonds to finance the acquisition of the leading biscuit and snack food company in New Zealand.

Recent acquisitions and expansion programs allowed its parent firm, JG Summit Holdings Inc. of the Gokongwei family, to position itself to take advantage of the growing consumer sector in the Philippines, a company executive said yesterday.

“We plan to finance (the acquisition of Griffin’s Foods Ltd.) with debt so we’ll either borrow from a syndicate of banks or issue bonds,” Bach Johann Sebastian, senior vice-president of JG Summit, told reporters on the sidelines of a forum organized by the Economic Journalists Association of the Philippines and ING.

Sebastian said URC is looking to borrow all its funding requirements for the acquisition given the company’s strong balance sheet.

Last month, URC announced it is taking over Griffin’s for NZ$700 million (around P26 billion), its largest acquisition to date, to jumpstart its goal of becoming a major regional player.

Sebastian said the company is still waiting for the approval of New Zealand’s Overseas Investment Office.

“The upside there is the sourcing of raw materials, which we hope will add to the quality image of URC products, and the opportunity of these products to be sold to the ASEAN market,” Sebastian said.

The 150-year-old Griffin’s is New Zealand’s leading biscuit and snack food company with approximate net sales and earnings before interest, taxes, depreciation, and amortization of NZ$280 million and NZ$78 million, respectively.

For its part, URC is one of the largest branded consumer food and beverage product companies in the Philippines. The company behind top brands Jack n’ Jill, Hunt’s, C2, Blend 45, Uno Feeds and Cream All also has a significant and growing presence in the Southeast Asian markets.

“Our business strategy is to ride on the crest where the economy is. Right now, there’s a lot of consumption spending,” Sebastian said.

JG Summit’s units are taking advantage of consumer spending through commercial retail space of Robinsons Land Corp., branded snack foods of URC and budget carrier Cebu Air Inc., which owns and operates Cebu Pacific.

“Our economy is a consumption-driven economy that’s why we are on those businesses,” Sebastian said.

Asked about a potential investment in flag carrier Philippine Airlines (PAL), Sebastian said: “I think it’s going to be a regulatory issue because the government might view that as too much concentration.”

“We don’t have a business case owning a full-service airline because we are a low-cost airline,” Sebastian said, adding that the company has not been approached by anyone nor has it signed any confidentiality agreement to acquire PAL.

Diversified conglomerate San Miguel Corp. is still finalizing the sale of its 49-percent stake in PAL while the group of tobacco and airline magnate Lucio Tan is seeking funds to pursue the buyout.