Stock market commentary: Fruitas abandons plan to buy medical services company
Merkado Barkada
November 22, 2021 | 8:42
Friday’s disclosure mentioned that Fruitas [FRUIT 1.23 0.82%] To “Discussions over” to acquire 100% of Surehealth Clinic, for which he signed an acquisition agreement just two weeks ago. FRUIT said it “recognizes concerns” that the purchase “may become a distraction” from FRUIT’s “core food and beverage retail business” and considers its decision to end to discussions as “reinforcing its commitment to focus on” the potential significant growth of its restaurant business “.
FRUIT said it would continue to “improve” the physical and digital accessibility of its products and expand the network of community stores with “a focus on Balai Pandesal”.
MB RESULT
What a crazy race. On the one hand, you kind of have to give it to Lester Yu and FRUIT for listening to shareholder concerns (like mine: read it here) and nimble enough to walk away completely from the acquisition and plan to enter the medical industry within two weeks. This ability to act quickly is something I have praised the FRUIT management team for in the past. Until this misstep, FRUIT had only used this superpower for good by quickly learning about the COVID situation and reorganizing its business plan, adopting an online acquisition theme and investing massively in its delivery platform.
On the other hand, though, this is a time when I would like to know more about the team before it’s all forgiven, before I’m ready to move on and say “no harm, no fault “. How did the Surehealth acquisition project go this far? If FRUIT truly believes that the acquisition of Surehealth would be a distraction from its core business, what approval processes or steps need to be implemented to prevent the management team from wasting time on potential acquisitions that are so far from what she should be doing? Did the management team do an analysis that showed enormous potential in acquiring Surehealth, and if so, could FRUIT have presented this information in a less ambiguous manner and gained buy-in from? its shareholders and stakeholders? If the management team didn’t do that kind of analysis, and the deal involved buying an asset from the CFO’s mother, how could a deal with such massive conflicts of interest? it even start, let alone the point where FRUIT signed an acquisition agreement?
I feel like changing the paint color of the FRUIT truck shouldn’t let the company completely lower their “desired level†to zero stars (sorry for the GTA benchmark). I think it’s a step in the right direction, but there are some pretty big issues here that I think need a little bit of color and context before I’m ready to just forgive and forget.
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