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San Miguel lowers price for Cosmos

Philippine food and beverage giant San Miguel Corp. (SMC) apparently wants to buy soft-drink firm Cosmos Bottling Corp. (CBC) at a price lower than the previously agreed PHP 15-billion valuation.
The…

Philippine food and beverage giant San Miguel Corp. (SMC) apparently wants to buy soft-drink firm Cosmos Bottling Corp. (CBC) at a price lower than the previously agreed PHP 15-billion valuation. The conglomerate is back on the negotiating table with CBC-owner RFM Corp. to “bargain” for a lower acquisition price after concluding its due diligence study on the beverage firm“s financial books. A well-placed source said SMC has presented a list to RFM on why the PHP 15-billion valuation agreed on by both parties last August should be reduced. “The due diligence is already completed and obviously SMC will ask for a lower price since there are certain provisions to be made, for example, on tax liabilities,” the source said. SMC recently concluded its due diligence audit on CBC“s operations and financial books which took longer than expected due to several issues surrounding the deal. The final signing of the sale and purchase agreement was also moved from September to October. The two parties signed the memorandum of understanding covering the sale of CBC to SMC, Coca-Cola Bottlers Philippines, Inc. (CCBPI) and Atlanta-based The Coca Cola Co. (TCCC) last August and was immediately followed by the due diligence. The deal was closed at PHP 15 billion for 100% of the country“s second largest soft-drink company. The sale will include CBC“s three carbonated brands – Pop Cola, Jaz Cola, and Sarsi Rootbeer – as well as the company“s assets. The memorandum of understanding also included a 10-year non-compete agreement banning RFM from venturing again into the carbonated business. Of the PHP 15-billion proceeds, RFM will be paying off CBC“s PHP 2.3 billion in obligations. SMC, for its part, plans to grow CBC“s business which caters to the lower segments of the soft drink market through its 65% stake in CCBPI.

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