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Philippines' & Asia's Largest URC Took Over Australian Food Firm for $600 Million

Philippines group Universal Robina pays $600m for Kettle chips maker

Australia's second largest salty-snacks maker Snack Brands Australia has been swallowed up by Philippines food company Universal Robina, delivering a big pay-day for a group of investors who bought the business from Arnott's for a song eight years ago.

Universal Robina has agreed to pay $600 million for Snack Brands Australia and plans to take its key brands, which include Kettle Chips, CCs, Samboy, Cheezels and French Fries, into Asia, capitalising on growing demand for Western foods.

The deal comes two years after Universal Robina acquired New Zealand's largest snacks maker, Griffin's Foods, from private equity firm Pacific Equity Partners for $645 million.

With annual sales of $303 million and earnings of almost $60 million, Snack Brands accounts for close to 30 per cent of the salty snacks market and is the second largest player after Frito-Lay, which owns The Smith's Snack food Company and Red Rock Deli.

Universal Robina said the purchase price of $600 million recognized the growth potential of Snack Brands in Australia and overseas.

It intends to leverage Snack Brands' manufacturing capacity and its own distribution system to expand in Asia, while maintaining the Sydney-based business as an independent operation.

The acquisition is subject to approval by the Foreign Investment Review Board.

A positive for all

Snack Brands Australia chief executive Paul Musgrave said the acquisition was positive for the business and its staff.

"What this achieves for the business is to take Australian manufactured product, with its distinct food security advantage, into Asian markets with the benefit of an established distribution force," Mr Musgrave said.

"It means there are no intended job losses but instead a stronger growth path with a new partner and the prospects of adding new URC product categories from New Zealand to our local markets. It is also expected to be a positive for many of Snack Brands suppliers such as potato and corn growers," Mr Musgrave said.

A consortium of investors led by Mr. Musgrave acquired Snack Brands Australia in 2008 for a fraction of the price paid by biscuit maker Arnott's six years earlier.

In 2002, Arnott's made a $280 million takeover offer for the listed chip maker, which had sales around $280 million and was 32 per cent-owned by Thorney Investments, an investment company owned by Alex Waislitz, Richard Pratt's then son-in law.

But Arnott's struggled to make suitable returns from the snacks business and its US parent, Campbell Soup Co, eventually pulled the plug, hiring UBS to find a buyer. Arnott's asking price at the time was said to be $30 million.

Dipping into Aussie market

Snack Brands is the latest in a long line of Australian food manufacturers to be snapped up by Asian investors.

In April last year, Philippines food company Monde Nissin acquired family-owned dip and cracker company Menora Foods for about $55 million, a month after buying Nudie Juices for about $80 million and less than a year after outlaying $115 million for dip maker Black Swan.

Four years ago Chinese food company Bright Foods paid $500 million for Manassen Foods, while Singaporean oils and sugar company Wilmar International and Hong Kong investment company First Pacific paid $1.3 billion for Goodman Fielder in 2014.

Universal Robina is one of the largest food and beverage companies in south-east Asia, with annual sales around 109 billion pesos or $A3 billion and operations in the Philippines, Vietnam, Thailand, Indonesia, Malaysia, Singapore, Hong Kong and China.

Snack Brands was advised by former UBS banker Quentin Miller's Intrinsic Partners and law firm King & Wood Mallesons.

Snack Brands has a colorful past. Once known as Dollar Sweets, in 1985 the company was at the center of an historic industrial relations dispute against the left-wing confectioner's union which launched the career of then industrial relations lawyer Peter Costello. – Fairfax Media

Global Investors, Expats Praise Duterte's "War on Drug: 600,000 Surrendered" Give That Man A Medal!

Published at Frontera, “Six Week Assessment Of The Philippines’ Firebrand President” Peter Kohli a CEO of DMS Funds and a global investment think tank lauded Duterte’s War on Drugs citing 600,000 illegal drug peddlers and addicts surrendered. ? How absolutely refreshing he said.

I am sure many will think I am nuts or demented when I write glowingly about the new president of the Philippines. In this day and age of political correctness, it’s very refreshing to see a political leader call it as he sees it. The latest in a long line of political incorrect statements was the invective President Rodrigo Duterte’s hurled at the U.S. ambassador, and he isn’t backing down.

During the election it was very clear that most major political powers around the world were not rooting for him to win. In fact, the U.S. ambassador even inserted himself into the election, which I would think should be a no-no. In the end, it was these comments that ambassador Philip Goldberg made during the May election season that led to Duterte’s to ridicule last week. Whenever I read articles about statements positive or negative, made by political leaders, I always look at them from an investor’s point of view. Mr. Duterte comments are not any different.

So, what has happened in the Philippines since he took control in June? As the Washington Post writes in an article titled, “That time the Philippine president used a homophobic slur to describe the U.S. ambassador,” it seems to have been an intense few months. “Since Duterte took office, more than 400 suspected drug dealers have been killed, 4,400 have been arrested, and more than 600,000 people have surrendered themselves to authorities to avoid being killed.” That can’t all be bad can it? A few dead drug dealers and 600,000 surrender to the authorities to avoid being shot. Give that man a medal.

The Philippine economy has been blasting away as well with the latest GDP numbers coming in at 6.9% year-on-year, and inflation pretty much contained at 1.9%. The Philippine stock market is also up nicely as is the only Philippines focused ETF iShares MSCI Philippines (EPHE), which is up nearly 20% YTD, with the steepest rise coming after the election on May 9. However, the stock I would like to bring to the attention of investors is SM Prime Holdings (SMPH:PM). The company is the Philippines largest operator of shopping malls and retail space and is based in Pasay. Recently the company announced that net income had risen by 12% in the first half of 2016 and the stock itself is up about 40% YTD.

As the Philippine economy expands – which I believe it will under the new administration – consumer discretionary income will rise in tandem. With inflation appearing to be under control as well, consumers should spend more, thereby indirectly positively affecting the price of the stock.

It has been also among the hottest issue at the expat.com travelers’ community website when the issue about the war on drug in the Philippines whether is good or not. 99% of the expats living or working in the Philippines are in favor of Duterte’s war on Drug. They opposed the negative ideas of the travelers who have not yet visited the Philippines saying “You don’t know the Philippines yet but if you were here, you would love Duterte and the country”

In the early days of August, Mr. Duterte made a pronouncement that caught many off-guard. He ordered that the presidential plane be converted into an air ambulance, “I am comfortable with taking commercial flights and sometimes a private jet,” he said according to PhilStar.com. In addition, he also ordered the presidential yacht be converted into a floating hospital to take care of the soldiers wounded while battling terrorists. Now how many world leaders have you known to do that? How absolutely refreshing. –with sources for Expat.com and FRONTERA

Peter Kohli is the CEO of DMS Funds. As such, he manages the Firm’s operations, including index selection and fund development, and is actively involved in all of DMS Funds’ business development efforts. Peter is also an independent financial adviser/wealth manager under the name DMS Financial since 1983. Earlier, Peter held a variety of financial services-related positions, including financial planner involved in the sale of mutual funds. Peter holds a Chartered Financial Consultant (ChFC) designation from The American College (Bryn Mawr, PA) and a BA in Mathematics from The Open University (Milton Keynes, England).

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US Army: Ferdinand Marcos faked 'Maharlika' & File No. 60 Invented Heroism

The story about Ferdinand Marcos’ guerilla record was first published in the 1980s, but bears retelling today so that a new generation of Filipinos may know. Ferdinand Marcos. Wikipedia

US Army: Ferdinand Marcos faked 'Maharlika'

It was in the 80s when revelations that former president Ferdinand Marcos supposedly faked his military record during the Second World War surfaced.

The U.S. Army, meanwhile, said faking claims of heroism during the war is a criminal act. - The World Tonight, ANC, August 11, 2016

File No. 60: Marcos’ invented heroism

Video

Ferdinand Marcos invented heroism and faked soldier;s Maharlika Troops

The story about Ferdinand Marcos’ guerilla record was first published in the 1980s, but bears retelling today so that a new generation of Filipinos may know

The U.S. National Archives in Washington, D.C. is home to the Philippine Archives Collection, a treasure trove of 1,401 files of the Guerrilla Unit Recognition series documenting anti-Japanese resistance in World War II.

Within that collection is File No. 60, which documents Ferdinand E. Marcos’s claim of being a guerilla leader and founder of a unit called “Ang Manga Maharlika” with thousands of men in its roster from 1942 to 1945 in Northern Luzon. Marcos later changed it to “Ang Mga Maharlika.”

Included in the file’s more than 400 pages are the findings made by the U.S. Army which, after repeated investigations, repudiated Marcos’ claim and called it a lie.

Capt. Elbert R. Curtis, who handled Marcos’s claim for recognition for the most part of July 1947 to March 1948, came to two conclusions.

One, that “Ang Mga Maharlika Unit under the alleged command of Ferdinand Marcos is fraudulent.” Two, that “inserting his name on a roster other than the United States Armed Forces in the Philippines, Northern Luzon (USAFIP, NL) roster was a malicious criminal act.”

“It is also known that Marcos has enough political prestige to bring pressure to bear where it is needed for his own personal benefit,” Curtis said.

Before the Second World War, Marcos was known for two things—his acquittal for the murder of his father's political rival Julio Nalundasan, and topping the 1939 bar exam while in jail for the crime.

In an interview with writer Gregorio Brillantes in 1968, Marcos claimed that after becoming a lawyer, he had wanted to embark on a “teaching career,” dreaming to be a professor at his alma mater, the University of the Philippines College of Law, “lecturing on some complex point of law.” Whatever his post-graduation plans really were, the war altered them.

Marcos’s exploits during World War II, real or imagined, became part of the narrative of his political career. In November 1941 he joined the army as a third lieutenant. He was with the Filipino forces in Bataan until their surrender in April 1942. With other prisoners of war, he was interred at Camp O’Donnell in Capas, Tarlac.

On August 4 the same year, he was released. There was a claim that it was due to failing health. But in his own commissioned biography, "For Every Tear a Victory" by Hartzell Spence, Marcos claimed that his mother Josefa "bribed the authorities to hasten her son’s freedom."

Not much is known of Marcos’ activities from August 4, 1942 until December 12, 1944, when he joined the 14th Infantry, USAFIP, NL. If there was any indication of what he was up to, the records in File No. 60 point to one activity: taking advantage of the war times to line his pocket.

“Ferdinand Marcos was in San Quintin, Pangasinan, two or three months prior to the landing of the American forces, soliciting funds and guerilla help to construct a landing field in the vicinity,” the report said.

“The purpose of the landing field was to allow a plane to come in and evacuate General [Manuel] Roxas. Capt. Ray C. Hunt, commanding officer of PMD, LGAF placed Marcos under arrest for collecting money under false pretense. Gen. Roxas intervened on Marcos’ behalf and had him released to his custody,” it said.

The American forces reconquered Pangasinan in January 1945. Even before Marcos started his supposed activities in Pangasinan, on July 26, 1944, he sent a request to the returning American forces “for P100,000.00 Philippine currency and P500,000.00 Japanese war notes be sent his unit for maintenance.”

Marcos claimed to have 8,300 Ang Mga Maharlika members in North Luzon, Baguio, Zambales, and Manila. The investigator curtly noted that “this is entirely theoretical as no such unit ever existed.”

When Marcos ended his active service in 1946 he claimed to have gained the rank of major. Charles C. McDougald, in his book The Marcos File contested this claim, saying “The only promotion that Marcos could actually prove by official orders was his promotion to first lieutenant. All others, in addition to being contradictory and confusing, appear spurious.”

File No. 60 started with Marcos’s August 18, 1945 letter to the adjutant general of the Philippine Army requesting “that the complete roster of ‘Ang Manga Maharlika’ be approved and this organization be given recognition.”

The roster had 1,939 purported guerillas in active duty since December 1943. Guerillas recognized by the US Army received back pay for their efforts. The longer the period of their recognized participation in the war effort, the bigger their compensation.

On December 18, 1945, Marcos followed up on his original request for recognition. He also took the opportunity to provide additional materials to buttress his claim.

With this submission, listed as item number 6 in File No. 60, is the “Ang Mga Maharlika – Its History in Brief.” It was a history that not only chronicled the past and foretold the future, but invented both points in time as well.

On June 7, 1947, a four-man military team told Marcos that based on the result of an initial investigation, his request for recognition was denied. The record of service he was claiming “was not substantiated by acceptable evidence.” The leadership, structure, effectiveness, and extent of the supposed guerilla unit were sketchy.

As for Marcos’s claim to leadership, the team said, “Performance of the unit did not indicate adequate control by its leaders because of the desertion of its commanding officer [i.e. Marcos] to join another unit.”

On July 16, 1947, Marcos, then in Washington, D.C. as member of the Philippine Veterans Commission, fired off a telegram to “strongly protest denial of recognition” and promised that he would file a formal petition.

It took him almost half a year to do this. The petition was filed on December 2, 1947. He tried to rebut the findings of the investigators point by point. His arguments ran for nine pages of single-spaced typescript with sixteen appendices. Ten of these were sworn and notarized affidavits of prominent and high-ranking military men in the newly established republic, a number of whom were also former leaders of well-known guerilla units during the war.

Listed as affiants supporting Marcos’s request for reconsideration were Brig. Gen. Macario Peralta Jr., commanding officer of the Panay guerillas; Maj. Gen. Rafael Jalandoni, chief of staff of the Armed Forces of the Philippines; Col. Vicente Umali and Col. Primitivo San Agustin Jr. of the President Quezon’s Own Guerilla; Maj. Leopoldo Guillermo, signal officer of the East Central Luzon Guerilla Area; Maj. Salvador Abcede of the Negros Guerillas; Consul-General Modesto Farolan of the Philippine Consulate at Hawaii; Col. Margarito Torralba, Armed Forces of the Philippines; and Narciso Ramos, minister-counselor of the Philippine Embassy in Washington, DC. (to be continued)

The Third World Studies Center is making public File No. 60. Read it here.

[Joel Ariate and Miguel Paolo Reyes are researchers at the Third World Studies Center, College of Social Sciences and Philosophy, University of the Philippines Diliman. Judith Camille E. Rosette provided research assistance in writing this article. The digital copy of File No. 60 came from Ricardo T. Jose, Ph.D., the center’s director and UP professor of history, recently named the UP Alumni Association’s Distinguished Alumnus Awardee in Historical Scholarship and Research for 2016. VERA Files is put out by senior journalists taking a deeper look at current issues] Sources: ABS-CBN News S1, S2

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