• Puregold vs Mercury Drug?

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    Emeterio Sd. Perez

    Emeterio Sd. Perez

    TOSOH Corp. of Japan owns 581.8 million shares, or 87.97 percent, in Mabuhay Vinyl Corp. including 234.6 million shares that it bought from BDO Unibank Inc. and 83.2 million shares from the public.

    At P1.70 per share, Tosoh paid P540.22 million in buying 317.8 million MVC shares. At Friday’s closing price of the stock at P4.63, the newly acquired MVC shares had a market value of P1.47 billion, putting Tosoh ahead by P2.93 per share for a total of P931 million in paper profit.

    As of Dec. 31, 2013, Tosoh directly owned 264 million MVC shares, or 39.9 percent.

    Insider trades
    Lopez Holdings Corp., which is owned by the Lopez family, increased the number of shares it owns in First Philippine Holdings Corp. to 255.7 million shares, or 46.2 percent from 255.5 million shares. The additional shares resulted from its acquisition in 11 trades on Sept. 16 at prices ranging from a low of P67.10 to a high of P68.50.

    First Holdings closed on Friday at P68.45.

    Magdaleno B. Albarracin Jr., a member of the board of Trans-Asia Oil and Energy Development Corp., bought 25,000 Trans-Asia shares at P1.76 each. The newly bought shares increased his direct holdings to 11.8 million, or 0.24 percent.

    Trans-Asia closed on Friday at P1.81.

    Ivanna Guillergan de la Pena, a first vice president of Manila Electric Co., sold 2,000 Meralco shares in two trades – 1,000 shares at P299 and another block of 1,000 shares at P299.20. After selling, she still owned 21,000 Meralco shares. On Sept. 8, she sold 500 Meralco shares at P278.40 and another block of 500 shares at P279 each.

    Meralco ended trading on Friday at P298.40.

    Co’s new venture
    Puregold Price Club Inc., the retail chain of the Co group of companies, is already retailing pharmaceutical products. But Lucio L. Co, the businessman and family patriarch, wants more than just a slice of the big pie of the pharmaceutical industry, a corporate move that is seen to pose a challenge to the Mercury Drug chain. He wants his company’s pharmaceutical division to grow even much bigger by diversifying it into a separate stock corporation.

    Can Co make it? With his resources, why couldn’t he? He had spelled out his dream that he wanted to make an impact on the pharmaceutical industry in only “two to three years.” With this short time span, he is showing that he is a man in a hurry.

    Apparently, Co is well prepared for the challenges that lie ahead even if his pharmaceutical company has yet to be named. “To be able to fully develop this pharmacy line, and upon the directive of the Food and Drugs Administration,” Puregold said in a regulatory filing, “ the Company has to equip itself with full authority to engage in buying and selling of products of this kind.”

    To “legalize” his dream, Co first needed to amend the primary purpose of his company’s Articles of Incorporation to include “the selling and buying of pharmaceutical and medical goods, cosmetics, medicines, medical formulations, food supplements” and other related ventures.

    Now a division
    Puregold sells pharmaceutical products thru its “PurePharmacy,” a division of its retail outlet. But it sees the potential of a pharmaceutical line as “as essential commodities” that need a separate entity for it to be able to penetrate the market in so short a span of time of only three years.

    “Separate entity” would mean setting up a new company, either as a wholly owned subsidiary of Puregold or a new stock corporation with a new set of incorporators led by Co.

    Puregold’s disclosure of diversifying its “PurePharmacy” into a new company followed the acquisition by Ayala Healthcare Holdings Inc. of a 50 percent ownership in the Generika group.

    Ayala Healthcare is a wholly owned subsidiary of Ayala Corp., the listed holding company of the Zobel family.

    Puregold has 2.77 billion outstanding shares and 2.37 million treasury shares as of June 30, 2015 which it has piled up by buying back shares in the open market. It earmarked P1 billion to repurchase its own shares in the open market, which its board approved on Dec. 18, 2014. The stock repurchase will end on Nov. 4, 2015.

    As of June 30, 2015, Puregold had spent P17 million in its share buyback program.

    Puregold reported retained earnings of P12.7 billion, indicating the company’s capability to finance a new unit.

    How will Co be able to tap Puregold’s retained earnings without hurting the company’s financials? It is up to the public to speculate on the answer or answers.

    esdperez@gmail.com.

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    1 Comment

    1. If Puregold is trying to increase its financial war chest to finance a venture into pharmaceuticals, why is it buying back shares? WHat is Cosco’s role in this? Cosco is also in a buyback binge.