SM retracts bid to acquire ‘pasalubong’-items seller

THE SM Group on Thursday said it is not pushing through with the acquisition of Goldilocks Bakeshop Inc., a deal which already received regulator’s approval, citing changes in the business environment.

“Regarding the proposed acquisition by SM Retail of Goldilocks, both SM and Goldilocks have jointly agreed not to pursue the transaction given changes in the general business environment,” SM said in a statement.

No other details were given.

“This was a mutual decision, which was jointly agreed upon after a friendly and productive dialogue. Since we first began talks with SM, so much has happened in the marketplace, and many changes have occurred in our respective business environments. This caused us to reevaluate our position, and to arrive at a decision that we feel is best for both companies,” Goldilocks President Richard Yee said in the statement.

“We would like to thank the SM group for their intent to partner with us. This is yet another validation of our efforts to strengthen our leadership position. To this end, we remain focused on our plans and strategies, which has allowed us to achieve double-digit growth in the past few years. We now have over 600 stores to serve our customers nationwide, and we will continue this expansion in order to be more accessible to our customers,” he said.

According to the deal, SM Retail Inc., a unit of SM Investments Corp., will be the entity that was supposed to acquire Goldilocks, a network of retail stores known for selling polvoron (shortbread) as pasalubong (take-home gift).

The said deal has already received the green light for the Philippine Competition Commission early this year.

PCC commissioner Stella Quimbo said SM submitted voluntary commitments to address the concerns that the regulator raised, such as SM’s treatment of Goldilocks’s competitors that are also operating inside its shopping mall.

“However, we received word from the parties early this week that they have decided, after considering the commercial aspects of the transaction, not to proceed with the transaction. Of course it was unfortunate that it has ended this way,” Quimbo said. “We are actually quite pleased that they have actually volunteered to address concerns. We have come to some agreements but, however, obviously it’s a business decision that we respect.”
Quimbo added the circumstances may have changed after the SM group got the approval from the regulator.

A major finding by the review of PCC last year was the possibility of partial or total foreclosure in the supply of retail space in SM malls to competitors of Goldilocks after its acquisition by the SM Group.

“While selection of tenants in a mall is market-driven and based on consumer preferences, a mall operator should not be allowed to discriminate mall tenants and lease applicants, especially those that compete with stores owned by the mall itself,” the PCC said in its earlier statement.

“Such discrimination or unfair treatment can come in the form of arbitrarily assigning competitor tenants to disadvantageous locations or unfavorable lease terms, which amounts to partial foreclosure,” the regulator added. “It can also come in the form of giving less favorable lease terms or completely refuse them lease space in the mall, which amounts to total foreclosure.”

Another major concern the PCC identified is the potential for the SM Group to share a competing mall tenant’s business information to Goldilocks, since the mall operator, through its point-of-sale (POS) system, has access to sales records of tenants.

In its voluntary commitment, which the Commission approved in a decision issued last December 29, SM Prime Holdings Inc., which owns the mall, undertook to give Goldilocks’ competitors a fair share in their lease at all times.

SM Prime also committed to data protection such as not giving Goldilocks access to competing mall tenants’ information—including sales data captured by the POS system of its tenants, whether referring to consolidated sales, product category level or stock keeping unit level information, such as prices or quantities sold.


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