The group of Lucio Tan and Philip Morris Philippines Manufacturing, Inc. are simplifying the structure of their cigarette partnership by folding joint assets into PMFTC Inc., the country’s leading tobacco manufacturer and distributor.
Conglomerate LT Group Inc. disclosed to the Philippine Stock Exchange on Monday that PMFTC Inc., which the group indirectly owns through Fortune Tobacco Corp., has obtained board approval to merge with Philip Morris Philippines Manufacturing, Inc.
PMFTC would be the surviving corporation effective June 1, albeit subject to the Securities and Exchange Commission’s approval, the disclosure said.
“The merger is part of an internal restructuring process and is not expected to materially affect the operations, earnings, and ownership of PMFTC,” the disclosure said.
PMFTC’s articles of incorporation would be amended by the articles of merger and plan of merger.
LTG conducts its tobacco business through its 99.6 percent ownership in Fortune Tobacco, which in turn owns 49.6 percent of PMFTC. The latter had an estimated 70.5 percent market share of the local tobacco market in 2019.
Incorporated in 1965, Fortune Tobacco introduced the most successful local cigarette brands in the Philippines, including the Fortune, Champion, and Hope menthol brands. Before the creation of PMFTC, it held the largest domestic tobacco business in the Philippines.
In 2010, Fortune Tobacco and Philip Morris combined their respective domestic business operations by transferring selected assets and liabilities to PMFTC. The establishment of PMFTC allowed both groups to benefit from their respective, complementary brand portfolios as well as cost synergies.
Within LTG, the tobacco segment posted a net income of P12.2 billion for the nine months of 2020, higher than the P9.6-billion bottom line in the same period the previous year. This is due to the increase in equity in net earnings from PMFTC to P12.2 billion during the period in review. —DORIS DUMLAO-ABADILLA INQ
https://business.inquirer.net/316425/pmftc-sets-merger-with-philip-morris-ph
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