Universal Robina (URC – P18.50) buys Robinson Land (RLC – P10.75) shares; JG Summit (JGS – P6.10) has some explaining to do!

Universal Robina disclosed that it will acquire 293m Robinson Land shares from Express Holdings. The deal is valued at P3.5bn based on the P10.75 closing price of RLC today. Express Holdings is a fully owned subsidiary of JG Summit. Express Holdings is primarily a vehicle used by JGS to provide liquidity for its listed units. There is nothing wrong with this except that it has to disclose why it sold its holdings in RLC to URC. It simply transferred the holdings from one pocket to another. The transaction looks odd.

URC recently raised P4.7bn from an international offering. I don’t think the work program calls for URC to invest in RLC. Investors will be critical of this transaction. I guess this is the reason why shares in JGS related companies have been underperforming the market.

I have recently turned positive on JGS related stocks. Please check http://bigbigtrade.blogspot.com/2006/05/emerging-plays-why-jg-summit-jgs-p780.html
However, the conglomerate has to come clean with its recent actions. Why is JGS in a rush to cash out its holdings in RLC. What is the financial objective of URC in investing in RLC. It is totally unrelated to its food business. It seems that JGS is going back to its old habit of moving funds from one related company to another without properly explaining the actions. As a publicly traded company, JGS cannot just move funds as if it is still a family-owned private entity. Until these issues are cleared, I will be staying out of JGS related stocks.