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Monde Nissin to buy 15% stake in Figaro Coffee

By Justine Irish D. Tabile, Reporter

MONDE Nissin Corp. is acquiring a 15% stake in Figaro Coffee Group, Inc. (FCG) for around P820.27 million in a move analysts see as helping expand the companies’ business reach.

“We are excited with the opportunity to become shareholders in FCG as it provides a greater exposure to the food service sector which we view as a potentially attractive avenue for further growth both here in the Philippines and abroad,” Monde Nissin Chief Executive Officer Henry Soesanto said in a media release on Thursday.

In a regulatory filing on Thursday, FCG whose main business unit operates and franchises a network of retail restaurants said its board approved on Jan. 25 the issuance of about 820.26 million common shares to Monde Nissin at a peso each.

Monde Nissin separately told the stock exchange that its board delegated to its executive committee the subscription to the FCG shares.

With the announcement, shares in FCG climbed by five centavos or 5.62% to close at P0.94 apiece. Monde Nissin slipped by 36 centavos or 2.52% to P13.94 each.

FGC Chairman Emeritus Jerry Liu said his group welcomes the partnership with Monde Nissin.

“[W]e believe a combination of their leadership in the food sector, strength in manufacturing and timeless brand equity, combined with our fast-growing store network and brand strength will yield excellent opportunities for Figaro Coffee Group to solidify its position as a very strong and stable [food and beverage] company,” he said.

According to Mr. Soesanto, the partnership will help in enhancing the procurement capabilities of FCG, the parent of Figaro Coffee Systems, Inc., which operates Figaro Coffee, Angel’s Pizza, Tien Ma’s, The Figaro Group Express outlet, and Cafe Portofino.

Meanwhile, analysts expect the deal to benefit both sides, with FCG benefiting immediately.

“FCG has a lot of room for growth, expanding aggressively amid the reopening of the economy, and the recent subscription would be a great tool to further widen its local footprint to boost revenues,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

On the other hand, Monde Nissin “could hitch a ride alongside this expansion,” he added.

AP Securities, Inc. Equity Research Analyst Carlos Angelo O. Temporal said in a Viber message that while the benefits of the acquisition will not materialize immediately for Monde Nissin “we think in the long run this remains positive for the company as it indicates that management is open to diversify to boost its income.”

He said his assessment considered the size of the investment consideration of about P820 million against Monde Nissin’s current market capital of P257 billion.

“FCG, on the other hand, is the one likely to benefit the most from this transaction. Aside from the proceeds the company will receive which will be utilized for its expansion, the entry of Monde could help FCG improve its cost efficiency through the former’s economies of scale, and its product offerings such as by incorporating Monde’s products like alternative meat to FCG’s restaurants — a key trend that Shakey’s Pizza Asia Ventures, Inc. is taking advantage of,” Mr. Temporal added.

Mr. Temporal added that he expects FCG’s share to see higher uplift from the transaction than Monde Nissin.

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