Goldilocks Bakeshop scheduled Initial Public Offering (IPO) did not push through due to the elevated political and economic risks after the unexpected outcome of the 6 May 2016 general election. This made Goldilocks Bakeshop a legitimate Merger and Acquisition (M&A) candidate due to its remarkable economic moat. From a one-store bakeshop in Makati City in 15 May 1966, Goldilocks Bakeshop became a 579-store food retailing enterprise in the Philippines with branches in Canada, Thailand, and United States. When the political and economic storm calmed down, SM Retail and Goldilocks Bakeshop started negotiating for a proposed joint venture, equity investment or cooperation agreement. SM Retail is a subsidiary of SM Investments Corporation - a public conglomerate with business interest in retail, banking, property, and equity investments. SM Retail agreed to acquire a majority stake in Goldilocks Bakeshop for an undisclosed amount and the proposed equity investment was approved by the Philippine Competition Commission (PCC) on the condition that SM Retail will be subjected to random inspections by the PCC to ensure compliance in managing potential competition issues in the transaction. SM Retail must address any competition issues and any breach of the conditions will subject it to fines and other legal remedies. Under the Philippine Competition Act (PCA), the PCC is mandated to review M&A that breach the P1 billion threshold to ensure that these transactions will not abuse the merged business position by engaging in conduct that will prevent or reduce competition. PCA defines, prohibits, and penalizes undue dominant position, anti-competitive agreements, and anti-competitive M&A. But the proposed M&A went nowhere when SM Retail announced that it had abandoned its plan to acquire a majority stake in Goldilocks Bakeshop due to changes in the general business environment. We were taken aback when the proposed M&A was canceled and what confused us was the obscure reason for the cancelation. General business environment has been stable and favorable to M&A so it is bothersome to hear a lame excuse from a renowned retail conglomerate run by postgraduate-educated management team. Perhaps the PCC imposed unreasonable conditions to ensure free market system or the due diligence revealed the business shenanigans of Goldilocks Bakeshop. We do not know the reason why the proposed M&A was canceled but what we do know is that Goldilocks Bakeshop will remain a legitimate M&A candidate due to its remarkable economic moat.
