Oil tycoon buys out FamilyMart owners

DAVAO-BASED tycoon Dennis A. Uy is acquiring the local operator of FamilyMart convenience stores through Phoenix Petroleum Philippines, Inc. — the latest in a series of buyout deals that broaden his business beyond logistics and oil.

In a statement issued Monday, Phoenix Petroleum said it has signed a memorandum of understanding with the three owners of Philippine FamilyMart CVS, Inc. to buy 100% of the company.

The sellers were SIAL CVS Retailers, Inc., a 50-50 joint venture between Tantoco-led SSI Group, Inc. and Ayala Land, Inc.’s wholly owned unit ALI Capital Corp., with 60% ownership, and Japanese firms FamilyMart Co. Ltd. and ITOCHU Corp., which own 37.6% and 2.4%, respectively.

“Philippine FamilyMart has built a reputation for convenience and fresh, quality offerings. We are pleased to have it as a strategic addition to the group as we broaden our products and services and offer greater convenience through our customers,” Mr. Uy was quoted as saying.

Phoenix Petroleum said the acquisition would complement its fuel retail business, now with 518 stations nationwide. To date, there are a total of 68 FamilyMart branches in Luzon.

“The company sees the potential acquisition of PFM (Philippine FamilyMart) complimentary to the retail on-site offerings of the company. Further, it is a unique opportunity to gain entry into the fast-growing domestic convenience retail market,” Phoenix Petroleum Corporate Secretary Socorro Ermac Cabreros wrote in a letter addressed to regulators, a copy of which was submitted to the PSE.

In a separate disclosure, SSI President Anthony T. Huang said: “We are proud to have introduced FamilyMart to the Philippines. Filipinos have really embraced the convenience store format and FamilyMart is well positioned as one of the top CVS brands in the country.”

For his part, ALI Senior VicePresident Jose Emmanuel H. Jalandoni said the acquisition will help boost FamilyMart to the next level of growth.

“We believe that they [Phoenix Petroleum] have a robust platform for taking FamilyMart to the next level and will be excellent stewards of moving the brand forward,” he said.

The transaction will require approval from the Philippine Competition Commission, the country’s competition watchdog tasked to review mergers and acquisitions worth more than P1 billion. None of the companies involved in the Philippine FamilyMart sale disclosed the value of the deal.

Diversified Securities, Inc. equities trader Aniceto K. Pangan surmises the SSI and ALI tandem may have been prompted to sell FamilyMart after failing to hit projected growth targets for the convenience store.

“So what they did is rationalize the different stores from the original setup. But based on, maybe they have projections, since the results are not the ones they see, so they decided to sell on the basis of missing their target,” Mr. Pangan said in a telephone interview yesterday.

In its regulatory filing for the quarter ended June, SSI said the group’s share in losses of the FamilyMart joint venture was at P37 million for the first half of 2017.

Analysts said the acquisition is a positive step for Mr. Uy’s business ventures, a model similar to the SM Group’s purchase of a 34.5% stake in the parent firm of logistics firm 2GO Group, Inc.

“Logistics is more of somebody orders from you — maybe they are planning to go online. That will be a beneficial move on the part of the consumers. That’s the advantage of logistics, you have synergy with the consumer industry,” Mr. Pangan said.

Regina Capital Development Corp. Managing Director Luis A. Limlingan likened the acquisition to Pilipinas Shell Corp.’s placement of Select convenience stores next to its gasoline stations.

“Theoretically good since both FamilyMart and PNX can capitalize on the synergies possible. Similar to SELECT for Shell PH,” Mr. Limlingan said in a mobile phone message. PNX is the ticker symbol of publicly listed Phoenix Petroleum.

Mr. Limlingan, however, noted that it would take a while for Mr. Uy’s group to achieve synergies for Phoenix Petroleum and FamilyMart, citing the gap in the number of stores of the two brands.

“Downside, FamilyMart upkeep is the highest among convenient stores, as disclosed by the Ayalas previously. Second, Ayala’s mentioned certain number of stores for a breakeven point. At PNX current 525 stations as of end-2016, that’s still a long way for PNX, and a lot more cash outflow,” Mr. Limlingan added.

Mr. Uy, a known friend of President Rodrigo R. Duterte, has been on an acquisition spree to further expand his businesses. He acquired Bonifacio Global City-based school Enderun Colleges last July, marking his entry into the education sector. The businessman has also recently listed his shipping firm Chelsea Logistics Holding Corp. on the stock exchange last June, using the proceeds of the offer to expand his fleet and further acquire more shipping companies.