Fruitas acquires majority stake in Mang Bok for P8.9M

Fruitas [FRUIT 0.72, down 1.4%; 67% avgVol] [link] disclosed that its wholly-owned subsidiary, Negril Trading Inc. (NTI), has purchased a 60% majority stake in Bigboks Enterprises Inc. (BEI) for P8.86 million. The BEI shares are primary, and the intent of the parties is for BEI to use the money raised to acquire assets related to Mang Bok’s business from a company called Boksbro Inc, including all assets of the company (including intellectual property like logos, trademarks, and recipes). NTI will pay 25% of the subscription price right away, with the balance to be paid in FY25. FRUIT said that this acquisition is “expected to increase consolidated revenues”, and marks the company’s entrance into the “roasted chicken segment.”

MB bottom-line: In the corporate world, there are basically two ways to buy a business. You can either buy all of the shares of the company that owns the business or you can buy all of the “stuff” (the assets) that make up the business and leave the shares of the company alone. Some prefer to acquire the shares, but share ownership exposes the owner to all of the potential legal liabilities (known or otherwise) lurking in the background. I’m not saying that the Mang Bok brand has skeletons in the closet that Lester Yu is artfully dodging with this asset purchase, but if the seller is willing to basically sell you every asset separately, that can be a quick and safe way to acquire a brand like Mang Bok that has been operating for more than 20 years. As I talked about in my last writeup, I like this acquisition for FRUIT as it provides new menu items for its digital platform that work well with a ghost kitchen/delivery setup (chicken travels well), but it also gives FRUIT a new option for physical locations to take advantage of the increasing post-COVID foot traffic in malls and other quasi-public places.

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