LISTED DoubleDragon Corp. (DD) plans to secure a 35% interest in publicly traded retailer MerryMart Consumer Corp. through a P1.28-billion agreement.
DD intends to purchase 2.66 billion common shares of MerryMart at 48 centavos per share from Injap Investments, Inc., as stated in a regulatory submission on Wednesday.
The pricing is derived from the 30-day volume-weighted average price (VWAP) of MerryMart shares. The payment structure consists of half being paid in DD shares, with the balance amounting to P637.97 million being settled in cash.
MerryMart is led by Edgar “Injap” J. Sia II, while DD is a partnership between Mr. Sia and Jollibee Group Founder and Chairman Tony Tan Caktiong.
The agreement mandates that DD execute a compulsory tender offer for MerryMart shares owned by other shareholders of the entire issued and outstanding capital stock at the same valuation, pending final regulatory approvals.
“This transaction results in a total equity valuation for MerryMart of around P3.65 billion, calculated based on the 30-day VWAP pricing,” DD remarked.
DD indicated that the acquisition of a share in MerryMart aligns with the company’s strategy to transition into an investment holding entity.
“Considering MerryMart Group’s diverse formats in retail and wholesale, alongside its pharmacy subsidiaries which are significant players in Quezon-Luzon and Zamboanga-Mindanao, plus its leading grocery operation in Capiz province, the acquisition is anticipated to generate long-term value and synergy for DD,” DD added.
In April 2021, DD modified its articles of incorporation to redefine its primary objective from a real estate developer to an investment holding company.
MerryMart generates over P7 billion in recurring annual revenue from essential retail sectors such as groceries and pharmacies, in addition to other consumer-oriented businesses. It operates 135 branches nationwide.
DD noted that the acquisition would help facilitate its goal of achieving P500 billion in revenue by the year 2035.
On Wednesday, shares of DD increased by 17.20% or P1.45 to reach P9.88 per share, while MerryMart stocks rose by 25% or 12 centavos to 60 centavos each. — Revin Mikhael D. Ochave
