LISTED RETAILER Puregold Price Club, Inc. announced on Wednesday that the company’s board of directors had approved its acquisition of 14 DiviMart supermarkets.
The deal with DiviMart, a supermarket chain owned by entrepreneurs Harry Uy and Vivian Ong Juanitas, includes leasehold improvements, furniture, fixtures, equipment, and merchandise inventory, Puregold said in a disclosure to the stock exchange.
“The agreement will allow Puregold access to all Divimart supermarket locations, which may instantly be converted to Puregold stores under a sublease transaction,” the company noted.
The new acquisition, according to the company, is part of its strategy to expand its reach into broader markets. The company has 531 stores as of the end of March. These include 456 Puregold stores, 23 S&R Membership Shopping Warehouses, and 52 S&R New York Style quick-service restaurants.
The 14 stores are located in Angat, Bulacan; Mapulang Lupa, Pandi, Bulacan; Morong, Bataan; Cabanatuan City, Nueva Ecija; Olongapo City; San Isidro, Taytay, Rizal; San Miguel, Pasig City; Manggahan, General Trias, Cavite; Mambog, Bacoor, Cavite; Pulo, Cabuyao, Laguna; Tayuman, Manila; Aliaga, Nueva Ecija; San Juan, Taytay, Rizal; and Pulilan, Bulacan.
“The consideration for the acquisition is below 10% of the corporation’s book value,” Puregold said.
Puregold and DiviMart are “still finalizing the definite consideration for the contemplated transaction because the evaluation of store locations, improvements, furniture, fixtures, equipment, and merchandise invetory is still ongoing,” the company added.
DiviMart has more than 30 branches nationwide and is “known for its low prices and wide selection of goods.”
It offers a variety of products, including fresh produce, meat, seafood, dairy, baked goods, frozen foods, snacks, beverages, household goods, and personal care items.
The acquisition of 14 new stores may help drive Puregold’s earnings upward as it expands its market presence and gain access to new locations, according to analysts.
“Given the company’s store expansion plans, this should help the company maintain its market share. The focus has been into expanding PGOLD’s reach in provincial areas,” said Regina Capital Development Corp. Head of Sales Luis A. Limlingan in a Viber message.
He added that the store expansions should contribute much more to growth on the latter part of the year.
“It’s a small deal given Puregold’s massive size, but a good move nonetheless as this will further expand the company’s geographic footprint and extend its market reach,” China Bank Capital Corp. Managing Director Juan Paolo E. Colet said in a Viber message.
With the acquisition, the company may improve sales and efficiencies in the new stores, which should “translate to better earnings moving forward,” he added.
“While the acquisition provides growth opportunities, the actual impact on Puregold’s earnings will depend on how well the company manages and integrates these new assets into its existing operations,” Globalinks Securities and Stocks, Inc. Head of Sales Trading Toby Allan C. Arce said in a Viber message.
For the first quarter, Puregold recorded an attributable net income of P2.41 billion, up 12.1% from P2.15 billion in the same period last year.
Its top line in the three-month period rose by 15.1% to P45.11 billion from P39.21 billion the previous year.
Puregold shares closed 2.84% higher at P29 apiece on Wednesday. — Adrian H. Halili
