The Friday disclosure mentioned that Fruitas [FRUIT 1.23 0.82%] has “terminated discussions” to acquire 100% of Surehealth Clinic, which it signed an agreement to acquire just two weeks ago. FRUIT said that it “recognized concerns” that the purchase “may become a distraction” from FRUIT’s “core food and beverage retail business”, and that it considers its decision to terminate the discussions as “reinforcing its commitment to focus on the “significant growth potential of its food service business”.
FRUIT said that it would continue to “enhance” the physical and digital accessibility of its products and expand the community store network with an “emphasis on Balai Pandesal”.
MB BOTTOM-LINE
What a wild ride. On the one hand, you have to kind of give it to Lester Yu and FRUIT for listening to shareholder concerns (like mine: read it here), and being agile enough to hard-pivot away entirely from both the acquisition and the plan to enter into the medical industry in a two-week span of time. That ability to act quickly is something that I’ve praised FRUIT’s management team for in the past. Up until this misstep, the FRUIT had only used this superpower for good when it quickly read the COVID situation and revamped its business plan, adopting an online-centric acquisitions theme and investing heavily in its delivery platform.
On the other hand, though, this is one time where I’d like to hear more from the team before all’s forgiven, before I’m willing to move on and just be all like “no harm, no foul”. How did the plan to acquire Surehealth even get this far? If FRUIT truly believes that the acquisition of Surehealth would be a distraction to its core business, what processes or approval steps need to be implemented to prevent the management team from wasting time on potential acquisitions that are this far off from what it should be doing? Did the management team do an analysis that showed huge potential in the Surehealth acquisition, and if so, could FRUIT have presented this information in a less ambushy kind of way and gained buy-in from its shareholders and stakeholders? If the management team didn’t do this kind of analysis, and the deal involved the purchase of an asset from the CFO’s mom, how could a deal with such massive conflicts of interest even get off the ground, let alone to the point where FRUIT signed an agreement to acquire?
I feel like changing the paint color on the FRUIT truck shouldn’t let the company entirely drop its “wanted level” to zero stars (sorry for the GTA reference). I think it’s a step in the right direction, but there are pretty major issues here that, I think, need some color and context before I’m ready to just forgive and forget.
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