Based on its recent disclosure, Figaro Coffee Group, Inc. (FCG) has approved the
issuance of 820.3 Million common shares which will be sold to MONDE at a price of 1.00\/share. This would effectively give MONDE a 15% stake in the company, though this would likewise result in some dilution to FCG shareholders. For MONDE, its 15% stake is likely to entitle the company to at least 1 board seat in FCG.<\/p>\n\n\n\n
The proceeds from the sale will be used by FCG to finance its ongoing expansion plans. No details have been given yet as to how the acquisition will specifically benefit MONDE business-wise. However, we note that the shares may provide MONDE with an additional stream of dividend income. <\/p>\n\n\n\n
FCG strives to have a dividend payout ratio of 10% to 30%, although their most recent dividend was higher at 45% (P0.01936\/share). While it has not yet been disclosed how MONDE financed the acquisition, the company should be able to absorb any potential debt impact given that it has the lowest net debt-to-equity among our covered manufacturers. At the acquisition price of P1.00\/share, this would translate to 16.3x P\/E.<\/p>\n\n\n\n
Our current Target Price for FCG is P0.74 per share, while our Target Price for MONDE is P15.50 per share.<\/p>\n\n\n\n