LUCIO TAN EYEING PEPSI
Makati City, Aug. 10, 2000 - Having just purchased 30.39 percent of Philippine National Bank for P6.3 billion, beer and tobacco tycoon Lucio Tan is reportedly planning a similar move on ailing Pepsi Cola Products Philippines Inc. (PCPPI).
The Philippine Star, quoting a source close to Tan, said PCPPI is like the other companies which Tan has bought, like PNB and Philippine Airlines. "They are all ailing companies and Mr. Tan wants to have a role in turning them around. He gets satisfaction out of that," the source said.
He said that in the case of PNB and PAL, Tan's purchase was motivated by his desire to help the national interest.
"With all my money, I can only eat three times a day and with all my vehicles, I could only ride one. That is why I want to help others," Tan was quoted as saying.
The source revealed that Tan's interest in PCPPI started way back in the mid-80s. "Before the Lorenzos took over ownership of Pepsi from the group of (Danding) Cojuangco-Escaler, he (Tan) already wanted the company but then President Aquino decided in favor of the Lorenzos," the source said.
The Lorenzos later sold their interest in Pepsi to the Guoco group in 1997. But due to mounting losses, the Guoco group reduced their holdings from 94 percent to only 62 percent, following the sale of 32.87 percent of its stake in PCPPI to PepsiCo Inc. Of the remaining 62 percent, 36 percent is held directly by Guoco while 26 percent is held by its affiliates.
A top official of Guoco was quoted as saying that they regret having bought PCPPI due to its mounting losses and are willing to unload more shares. Guoco Holdings (Phils.) Inc., the local subsidiary of the Malaysian-based Heong Leong group, paid the Lorenzo family and PepsiCo $120 million for a 94- percent stake in PCPPI.
Pepsi used to hold the largest share of the domestic market at 80 percent during the 80s or during the time that the group of Cojuangco-Escaler was in control. Now, it is a poor third to Cosmos Bottling Corp. with Coca-Cola holding the lead.
Pepsi's market share stood at 19.4 percent last year which was still an improvement from the 13-percent share before the Guocos took over in 1997. In 1998, Guoco spent P700 million to upgrade Pepsi's facilities.
Pepsi currently has 11 bottling plants and more than 100 sales offices and warehouse throughout the country. Its manufacturing facilities are located in Muntinlupa, La Union, Naga, Cebu, Iloilo, Bacolod, Leyte, Davao, Cagayan de Oro and Zamboanga.
PCPPI is a licensed bottler of Pepsi products and other products like Seven-Up, Mountain Drew and Mirinda. It imports the concentrate for its softdrinks products from PepsiCo. Inc. in New York, while sourcing other raw material requirements such as sugar and packaging products from local producers.
PepsiCo Inc. paid P2 billion to acquire Guoco's 32.87-percent stake in PCPPI. It bought new shares, converted loans to equity, and acquired shares from a Guoco indirect subsidiary.
The investment which was made early last year involved a subscription of 482.5 million shares, loan-to-equity conversion, and the acquisition of additional shares from the company.
A source said that PepsiCo just wants to make sure that it has a continuing market for its concentrates -- even if it means infusing more money into its licensed bottlers.
Reported by: Sol Jose Vanzi
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