Friday, July 11, 2014

Max's Group consolidates 20 assets under Pancake House via share-swap deal



Max's Group of Companies has consolidated all of its 20 assets under listed restaurant chain Pancake House Inc. via a P4.054-billion share-swap deal to simplify the organizational structure of Max's. In a disclosure to the Philippine Stock Exchange, Pancake House said its board green-lit the acquisition of all the issued and outstanding shares of stock of companies under Max’s Group. Pancake House is 89.9 percent owned by Max's Group.

Under the deal, 20 companies will be folded under Pancake House, while shareholders of the Max's Group will receive 270.2 million shares worth P15 apiece or P4.054 billion from unissued capital stock of Pancake House. The share swap deal is still subject to Securities and Exchange Commission approval. Last June 10, Pancake House Inc. said it will raise its authorized capital stock to P1.4 billion from P400 million in order to fund a 100 percent stock dividend.

"We spent several months of extensive analysis evaluating the Pancake House business, its brands and potential synergies with [Max's Group of Companies], and concluded with the help of management, that the integration of MGOC and Pancake House was in the best interest of Pancake House shareholders," president and CEO Robert Trota said in a statement attached to the disclosure. "The integration leverages the operational synergies of both groups, creating a bigger, more integrated and efficient organization. With more brands in our portfolio, we have greater flexibility to satisfy diverse customer preferences," he added.

The entities to be folded under Pancake House include: 

  • Ad Circles Inc.
  • Alpha Max Group Limited
  • Chickens R Us Inc. 
  • Fresh Healthy Juice Boosters Inc. 
  • Max's (Ermita) Inc. 
  • Max's Baclaran Inc.
  • Max's Bakeshop Inc. 
  • Max's Circle Inc. 
  • Max's Express Restaurants Inc. 
  • Max's Food Services Inc. 
  • Max's Franchising Inc. 
  • Max's Kitchen Inc. 
  • Max's Makati Inc. 
  • Max's SM Marikina Inc. 
  • MGOC Holdings Inc. 
  • No Bia Inc. 
  • RooM Ventures Corp.
  • Square Top Inc. 
  • The Real American Doughnut Company Inc. 
  • Trota Gimenez Realty Corporation

Trota said the integration will combine under one entity 14 brands. "This makes Pancake House the largest restaurant group in the country's increasingly competitive casual dining segment." The combined entity will house Max's Restaurant, Max's Corner Bakery, Krispy Kreme, Jamba Juice, Pancake House, Yellow Cab, Le Coeur De France, Maple, Dencio's, Kabisera, Teriyaki Boy, Sizzlin' Pepper Steak, The Chicken Rice Shop and Singkit, with over 500 outlets locally and 25 branches overseas.

Unicapital Securities Inc. research head Lexter Azurin said the move to consolidate all assets under one roof will definitely benefit shareholders. "They injected assets under the listed firm and it will be beneficial to shareholders as the company will now have additional revenues," he said. 

"The move is also part of consolidating all brands in one company, keeping the same businesses independent of each other but keeping the quality of the companies," Azurin added. Last February, "the house that fried chicken built" bought 233.16 million Pancake House shares or 89.95 percent of the restaurant chain, for P3.49 billion. In March, Trota said Max's purchase of Pancake House was a "strategic acquisition" with both brands existing as separate entities.