A regular reader of The Manila Times who identified himself as Teddy Sevilla is puzzled why Puregold has been buying back its own shares at a time when it “is trying to increase its financial war chest to finance a venture into pharmaceuticals.”
In reacting to Due Diligencer’s “Puregold vs Mercury Drug,” which appeared in this space on Monday, Mr. Sevilla also wanted to know Cosco’s role in Puregold’s diversification plan, noting its “buyback binge.”
I am sorry to disappoint Mr. Sevilla, along with many other readers of this paper because I don’t have a ready answer to his poser. As a matter of fact, I also wonder why businessman Lucio L. Co would disclose a future venture this early, given that he was looking forward to putting up a separate unit for a pharmaceutical business in “two to three years.”
The public, including Due Diligencer, can only speculate at this time on Puregold’s diversification strategy. Perhaps, the Cos may be reselling for profit the shares bought back by their two listed companies.
As of yesterday, the website of the Philippine Stock Exchange showed Cosco had 7.391 billion outstanding shares of 7.405 billion issued shares, which would result in 14.426 million treasury shares. Puregold, on the other hand, had 2.766 billion outstanding shares of 2.785 billion issued shares and 19.481 million treasury shares.
These numbers should alert the public on the Cos’ corporate moves, the diversification into pharmaceuticals being one of them.
Here is a posting that should give the public an idea on the profitability and non-profitability of buying back shares. As of June 30, 2015, Puregold had spent P35.991 million on 2.37 million treasury shares, or P15.186 each, while Cosco had bought back 9.89 million shares at an acquisition cost of P87.232 million, or P8.82 per share.
On Sept. 1, Puregold was last traded at P31.80, while Cosco closed at P7.01.
Of course, no one knows what the Co family plans to do with the treasury shares piled up by their two listed companies, but we could make a guess:
Due Diligencer’s speculation
Guess No. 1: Cosco and Puregold may combine their resources in organizing a new unit, swapping either their unissued shares or treasury shares with the shares of their new company.
Assume the corporate name PurePharma Inc. for the new entity, in which Cosco and Puregold would own 40 percent each and allow the public to acquire ownership of the remaining 20 percent, on the assumption the Cos would share the benefit of owning a piece of PurePharma, which is now only a division of Puregold.
Guess No. 2: The Cos could organize PurePharma as a closed corporation, meaning unlisted and non-public. They could also put up the new company as a subsidiary either of Puregold or Cosco, with direct ownership by the members of the family but without the participation of the public.
(Puregold is in the process of amending its Articles of Incorporation to reflect its pharmaceutical venture. It said its board has approved the move to amend in a meeting on Sept. 15, 2015.)
Anyway, Co, the patriarch, and the rest of his family are known to the public to be actively involved in the ownership by being significant and direct stockholders of both Puregold and Cosco.
In Puregold, for instance, insiders, mostly the Cos, own 452.645 million shares, or 16.37 percent. In Cosco, the Cos hold a total of 4.107 billion shares, or 55.54 percent, of which they directly own 4.062 billion. Of the family members, Co the patriarch and his wife Susan are the biggest individual stockholders with 2.318 billion shares and 1.78 billion shares, respectively.
Caution: The above is all speculation in view of the limited disclosure made by the Cos on their planned pharmaceutical company. Even if Puregold’s expansion is the primary purpose as provided for in its corporate charter, it has yet to disclose the ownership profile of the new company.
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If you happen to be a homeowner who has saved money to buy a house-and-lot package in a subdivision, expect some difficulties in dealing with the Register of Deeds. Not all of the agency’s branches, though, are as slow in releasing Transfer Certificates of Titles as the one in Kidapawan city. Imagine making an octogenarian wait for more than a year before she could obtain her lot title.
The question is, if other Register of Deeds offices in other provinces could act with dispatch on releasing lot titles, why couldn’t its branch in Kidapawan city do the same? Something must be wrong somewhere, which the Department of Justice should investigate. Calling on Justice Secretary Leila de Lima. Please help unclog said office of unreleased land titles in North Cotabato.