MPIC remains interested in Axelum

TOKYO — Metro Pacific Investments Corp. (MPIC) has reaffirmed its interest in coconut products manufacturer and exporter Axelum Resources Corp., with aspirations to finalize a deal by end of the year, contingent on the results of an ongoing due diligence review.

In a press briefing, MPIC chief financial officer Chaye Cabal-Revilla announced the extension of the due diligence period without providing a specific timeline. The due diligence agreement, pertaining to MPIC’s proposed acquisition of a 34.76 percent stake in Axelum, was originally set to expire on October 31.

“Discussions are ongoing. The due diligence (process) was extended because they had not met their targets. We have to rework their numbers. The expected performance, as assessed  in our earlier due diligence, has not materialized. And so we have to dig deeper into the assumptions and the KPIs (key performance indicators),” she said.

“We will review their forecast for 2024 because we conducted due diligence early last year and earlier this year. But the unfolding results in 2023 have been very far from their projected numbers,” Cabal-Revilla said, adding that a meeting with Axelum’s top executives has been scheduled for this week.

Axelum’s financial statements filed with securities regulators last week showed a net loss of P427.995 million in the nine months through September, a reversal from the P717.28 million profit recorded in the same period last year. Lower sales and increased finance charges were cited as contributing factors.

Sales of Axelum saw a 19 percent decline from January to September attributed to reduced orders and lower coconut prices. The company faced higher interest expenses, surging 89 percent due to elevated interest rates in the US, resulting in an operational loss of P131.55 million.

Despite a rebound in demand for coconut products in the third quarter, sales during the period were still down by 25 percent due to a slowdown in US consumer spending.

“From our perspective and theirs, our objective is to close the deal by the end of the year, subject to the extended due diligence and them being able to explain their forecast,” Cabal-Revilla said.

“They were saying that they envisage the US market returning to pre-pandemic levels. The US has been a problematic area for them. And so they need to take a look at their sales distribution, logistical costs, and more,” she pointed out.

Axelum, present in over 30 export markets, boasts a product portfolio encompassing coconut milk, desiccated coconut, coconut water and coconut cream, under the labels Fiesta, Fiesta Tropicale, Red V and Romantika. It is a major supplier to Vita Coco, the world’s largest and most popular coconut water drink.

In February this year, MPIC, a conglomerate with diversified interests in power, toll roads, water, transportation, healthcare, agriculture and real estate, unveiled plans to acquire a third of Axelum for P5.32 billion. This strategic partnership aligns with MPIC’s overarching goal of supporting the country in achieving  food security and enhancing income opportunities for coconut farmers.