Davao’s Dennis Uy exits 2GO, sells to SM Group
MANILA, Philippines — The Sy family’s conglomerate SM Investments Corp. is taking over 2Go Group Inc., strengthening its footprint in logistics during a period of upheaval for the industry.
SM is taking a controlling stake in 2Go after buying out major shareholder Chelsea Logistics and Infrastructure Holdings Corp., owned by Davao-based businessman Dennis A. Uy, the companies announced to the Philippine Stock Exchange on Friday.
The Inquirer reported on Monday that Chelsea was close to selling its entire stake in 2Go, one of the country’s leading logistics providers, to cut losses and to relieve pressure from growing debt obligations.
SM is buying the shares at P8.50 each. This values 2Go at P20.9 billion and Chelsea’s effective stake of 31.73 percent at P6.64 billion.
SM said it will file the mandatory tender offer documents to the Securities and Exchange Commission by March 22 this year. A tender offer gives minority shareholders a chance to exit with similar terms during buyout transactions.
Meanwhile, Chelsea said the proceeds of the sale will be used “to pay down the loan obtained for the acquisition of the shares.”
In 2017, Chelsea signed a $220 million loan deal with the Bank of China to support the acquisition of its 2Go stake.
The deal further eases pressure on Chelsea, which recorded a net loss of P367.2 million from its 2Go stake during the first nine months of 2020.
Chelsea’s overall losses for the period hit P2.6 billion, reversing profits the previous year, as operations were severely impacted by the global health crisis.
“With the divestment, Chelsea will not be impacted by 2GO losses, which will aid the company in recovering from the current COVID-19 pandemic,” Chelsea Logistics president and CEO Chryss Alfonsus V. Damuy said in a stock exchange filing.
“With our numerous group-wide initiatives currently being undertaken, we are confident that Chelsea will be best prepared and positioned to take advantage of the recovery of the industry as we move forward,” he added.
SM is one of the country’s largest companies and the main holding company of the Sy family’s property, banking, and retail empire.
Its entry in 2Go in 2017 was seen to support existing businesses. It also came as other conglomerates were expanding into logistics, deemed crucial in an archipelago such as the Philippines.
2Go reported a loss of P1.04 billion as of September last year, larger than its P923 million loss in 2019, after revenues dropped 16 percent during the pandemic.
The company provides passenger and cargo shipping, warehousing and distribution, cold chain solutions, domestic and international ocean, and air forwarding services, customs brokerage, project logistics, and last-mile package and e-commerce delivery.
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