URC’s Bear Market driven by Acquisition?

As I noted last night, URC tumbled into the Bear Market level. Apparently to contain the damage, index managers had to massively pump up SM companies to keep the 8,000 Maginot line at arms length distance.

Here is URC's disclosure published at the PSE

Universal Robina Corporation (URC) and Consolidated Snacks Pty Ltd today announced that they have entered into a definitive agreement under which URC through its wholly-owned offshore subsidiary URC International Company Limited will acquire 100% of the shares in CSPL for a total enterprise value of AUD 600M in a cash free, debt free deal. The transaction has been approved by the Board of Directors of both companies and is expected to close by 30 September 2016 subject to the approval of the Australian Foreign Investment Review Board (FIRB) and fulfilment of customary closing conditions. Consolidated Snacks Pty Ltd trades under the company name Snackbrands Australia (“SBA”), one of the country’sleading snackfoods company. SBA is the second largest player in salty snacks with a total market share of close to 30% and has a wide portfolio of chips including iconic brands like Kettles, Thins, CC’s and Cheezels. The company is also a preferred private label supplier and partner of the major Australian retailers. With continuous efforts of innovation, customer focus and operational efficiency, SBA has grown topline at a compounded annual growth rate of 7.4% in the past 4 years while EBITDA has grown 32.6% over the same time frame

Some top of the mind questions

Has the domestic market been saturated for URC to opt to invest overseas?

Has the Gokongwei family been diversifying its assets overseas because of the political environment? Has this been an insurance against the possible spread of "war on oligarchy"?

Has this signified the Gokongwei’s bet against the peso?

Since this is a cash free-debt free deal, then this makes the transaction an all equity swap. (see what bloated shares prices can do? It assumes a function of moneyness). Question, will treasury shares be sufficient or will URC be issuing more shares to finance the equity deal? If so how?

Interesting developments