CURRENT REPORT UNDER SECTION 17 OF THE SECURITIES REGULATION CODE AND SRC RULE 17.2(c) THEREUNDER
1. Date of Report (Date of earliest event reported)
Nov 9, 2021
2. SEC Identification Number
CS200930125
3. BIR Tax Identification No.
281-768-124-000
4. Exact name of issuer as specified in its charter
MerryMart Consumer Corp.
5. Province, country or other jurisdiction of incorporation
Republic of the Philippines
6. Industry Classification Code(SEC Use Only)
7. Address of principal office
9th Floor Tower 1 DoubleDragon Plaza, DD Meridian Park, Macapagal Ave. cor. Edsa Extension, Bay Area, Pasay City, PhilippinesPostal Code1302
8. Issuer's telephone number, including area code
+63287431111
9. Former name or former address, if changed since last report
N/A
10. Securities registered pursuant to Sections 8 and 12 of the SRC or Sections 4 and 8 of the RSA
Title of Each Class
Number of Shares of Common Stock Outstanding and Amount of Debt Outstanding
Common
7,594,936,709
11. Indicate the item numbers reported herein
Item 9
The Exchange does not warrant and holds no responsibility for the veracity of the facts and representations contained in all corporate disclosures, including financial reports. All data contained herein are prepared and submitted by the disclosing party to the Exchange, and are disseminated solely for purposes of information. Any questions on the data contained herein should be addressed directly to the Corporate Information Officer of the disclosing party.
MerryMart Consumer Corp.MM
PSE Disclosure Form 5-1 - Substantial Acquisitions References: SRC Rule 17 (SEC Form 17-C) and Section 4.4 and/or Section 5 of the Revised Disclosure Rules
Subject of the Disclosure
MERRYMART Consumer Corp. (“MERRYMART”) has signed Definitive Agreements finalizing the acquisition of 75.08% equity stake in Carlos Drugs-Lucena Inc. (“Carlos SuperDrug”).
Background/Description of the Disclosure
MERRYMART Consumer Corp. (“MERRYMART”) has executed a Memorandum of Agreement (“Agreement”) last November 8, 2021 finalizing the acquisition of 75.08% equity stake in Carlos Drugs-Lucena Inc. (“Carlos SuperDrug”).
The Agreement outlines the Carlos Family sale of two hundred eighty-seven thousand eight hundred fifty-six (287,856) common shares representing 71.96% in Carlos SuperDrug (the “Sale Shares”) to MERRYMART. In addition to acquiring the Sale Shares, the Parties have also agreed for the MERRYMART to infuse an additional Pesos Fifty Million Two Hundred Ninety Thousand, Philippine currency (Php50,290,000.00), more or less, in exchange for fifty thousand (50,000) common shares (the “Primary Shares”) to be issued by Carlos SuperDrug to bring its total ownership to 75.08%.
Carlos SuperDrug is the biggest pharmacy chain in Quezon Province and is set to celebrate its 75th anniversary next month. Carlos SuperDrug brand was founded in 1946 in Lucena City by the husband & wife team of Diomedes & Generosa Carlos.
The 27 branches of Carlos SuperDrug chain will form part of the 100 branch network goal of the MerryMart Group in 2021.
Date of Approval by Board of Directors
Nov 5, 2021
Date of Approval by Stockholders
N/A
Other Relevant Regulatory Agency, if applicable
N/A
Date of Approval by Relevant Regulatory Agency
N/A
Rationale for the transaction including the benefits which are expected to be accrued to the Issuer as a result of the transaction
Carlos SuperDrug has 27 operating branches to date and is EBITDA and Net Income positive.
In addition to enhancing MERRYMART’s range of pharmacy offerings, this transaction will give MERRYMART greater market share in the region and increase its competitiveness whilst strengthening its supply chain as MERRYMART continues to strive to deliver better value to its customers and stakeholders.
Description of the transaction including the timetable for implementation and related regulatory requirements, if any
Selling Shareholders to sell two hundred eighty-seven thousand eight hundred fifty-six (287,856) common shares representing 71.96% in Carlos SuperDrug (the “Sale Shares”) on Closing Date which shall be scheduled as soon as all Conditions Precedents are completed by the Selling Shareholders which include among others the approval of the SEC of the amendment of the Articles of Incorporation and By-Laws of the Corporation to accommodate the investment of MERRYMART.
In addition to acquiring the Sale Shares, the Parties have also agreed for the MERRYMART to infuse an additional Pesos Fifty Million Two Hundred Ninety Thousand, Philippine currency (Php50,290,000.00), more or less, in exchange for fifty thousand (50,000) common shares (the “Primary Shares”) to be issued by Carlos SuperDrug to bring its total ownership to 75.08%.
After the transfer of the Secondary Shares, Carlos SuperDrug will be owned 28.04% by the Carlos Family and 71.96% by MM. Then after the issuance of the Primary Shares, Carlos SuperDrug will be owned 24.92% by the Carlos Family and 75.08% by MM. Because of the agreed 20% minimum ownership of the Carlos family, unless agreed by both parties, MM can increase its stake in Carlos SuperDrug to a maximum 80%.
In case the Carlos family decides to sell any of its remaining shares in Carlos SuperDrug, they have to first offer these shares to MM, in addition to MM's Right of First Refusal on any third party offer for any of the shares of the Carlos Family in Carlos SuperDrug. Except for Tag-Along Rights granted to the Carlos Family, there are generally no share transfer restrictions on the sale by MM of its shares in Carlos SuperDrug.
After the signing of the definitive agreement last November 8, 2021, and pending the deliverables of the Carlos Family on amendments of the Carlos SuperDrug Articles of incorporation, the Carlos family has acceded to cede Board control over Carlos SuperDrug to MM. This was effected thru Irrevocable Proxies on the Sale Shares as well as the election of five nominees of MM to the 7-seat Board of Directors of Carlos SuperDrug.
Upon completion of the conditions precedents in the signed definitive agreement by the Carlos family to MM, the parties shall schedule Closing which shall principally involve the balance payment 50% of the Purchase Price and the parties to execute the Deed of Assignment over the Sale Shares.
Identities of the parties to the transaction
Name
Nature of Business
Nature of any material relationship with the Issuer, their directors/officers or any of their affiliates
Erlinda B. Carlos
“Selling Shareholder” of the Carlos Family of Carlos Superdrug
None
Ronald C. Taccad
“Selling Shareholder” of the Carlos Family of Carlos Superdrug
None
Lourdes C. Bravo
“Selling Shareholder” of the Carlos Family of Carlos Superdrug
None
Eduardo O. Carlos
“Selling Shareholder” of the Carlos Family of Carlos Superdrug
None
Celia O. Carlos
“Selling Shareholder” of the Carlos Family of Carlos Superdrug
None
Corazon C. Balquiedra
“Selling Shareholder” of the Carlos Family of Carlos Superdrug
None
Maria Eloisa C. Cena
“Selling Shareholder” of the Carlos Family of Carlos Superdrug
None
Maria Liezl S. Carlos
“Selling Shareholder” of the Carlos Family of Carlos Superdrug
None
Rosette C. Obcena
“Selling Shareholder” of the Carlos Family of Carlos Superdrug
None
Terms and conditions of the transaction
The nature and amount of consideration (e.g. price per share, the aggregate amount)
Aggregate amount of Pesos Three Hundred Thirty-Nine Million Eight Hundred Fifteen Thousand Five Hundred Sixty-Four and 80/100, Philippine currency (Php339,815,564.80) or a price of Pesos One Thousand Five and 80/100, Philippine currency (Php1,005.80) per common share for 75.08% ownership in Carlos SuperDrug.
Basis upon which the amount of consideration or value of the transaction was determined
The purchase price was based on the valuation agreed by Parties equivalent to a market multiple of sales less debt plus cash.
The number of shares to be acquired
287,856 secondary shares; 50,000 primary shares
Ratio/percentage to total outstanding capital stock
75.08
Terms of payment
Forty percent (40%) of the Purchase Price was paid last November 8, 2021 as a result of the execution of the Agreement, Fifty Percent (50%) of the Purchase Price shall be paid as soon as all Conditions Precedents are completed by the Selling Shareholders which include among others the approval of the SEC of the amendment of the Articles of Incorporation and By-Laws of the Corporation to accommodate the investment of MERRYMART and Ten Percent (10%) of the Purchase Price shall be held by the Purchaser as a retention amount to be released over 3 years.
Conditions precedent to closing of the transaction, if any
Upon the approval of the SEC of the amendment of the Articles of Incorporation and By-Laws of the Corporation to reflect the change of the classification of the Corporation from to a regular corporation and the removal of the restrictions on the ownership of shares in the Corporation and upon execution of deeds of a parcel of land property and completion of lease renewals of identified branches.
Description of the company subject of the transaction
Nature and business
Carlos SuperDrug is the biggest pharmacy chain in Quezon Province and is set to celebrate its 75th anniversary next month. Carlos SuperDrug brand was founded in 1946 in Lucena City by the husband & wife team of Diomedes & Generosa Carlos.
Discussion of major projects and investments
N/A
List of subsidiaries and affiliates, with percentage holdings
OTHERS (Indicate the number of the remaining stockholders) 16
34,958
8.7395%
Board of Directors
Name
(Regular or Independent)
BARNARD C. BALQUIEDRA
Regular
FERDINAND J. SIA
Regular
MARRIANA H. YULO
Regular
PEARL ANNE A. ESCOTE
Regular
JOSE ROELPH E. DESALES
Regular
JACQUELINE ANN MARIE O. GOMEZ
Regular
ESTELITA C. CATACUTAN
Regular
Principal Officers
Name
Position/Designation
BARNARD C. BALQUIEDRA
President/CEO
ANGEL E. CALEJA
Treasurer/CFO
JACQUELINE ANN MARIE O. GOMEZ
Corporate Secretary
DAX GERARD O. CARLOS
Assistant Corporate Secretary
Effect(s)/impact on the business, financial condition and operations of the Issuer
The 27 branches of Carlos SuperDrug will form part of the 100 branch network goal of the MerryMart Group in 2021 and its revenues and profit will be consolidated by MERRYMART moving forward. The acquisition will also increase the volume and scale of the MerryMart Group that will further enhance its cost efficiencies.
Other Relevant Information
This disclosure is being amended to include additional information of the agreement and updated the names of the new board of directors of Carlos SuperDrug.
MerryMart Consumer Corp.MM