Radio San Miguel

Signing of agreement seen next month
by Doris Dumlao

Beverage and food conglomerate San Miguel Corp. disclosed last Monday, Jan. 19 that it was negotiating sale of 43.25 percent of domestic beer unit San Miguel Brewery Inc. (SMB) to Japan’s second-biggest brewery, Kirin Holdings Co. Ltd., which currently owns about 20 percent of San Miguel.
At SMB’s current market capitalization, San Miguel could raise at least P54.2 billion from the sale, which it could use for its diversification ventures into mining, power and infrastructure.
In a disclosure to the Philippine Stock Exchange, San Miguel spokesperson Ferdinand Constantino said the company had signed a memorandum of understanding to enter into exclusive negotiations with Kirin on Kirin’s potential investment in SMB.
The sale will cut San Miguel.’s stake in SMB from about 94 percent to 50.75 percent. About six percent represents the SMB public float.
SMB has a market capitalization of about P135.5 billion based on its closing price Monday of P8.80 a share. Its share price rose 3.5 percent ahead of the announcement of the talks with Kirin in the afternoon.
Analysts said Kirin’s possible entry into SMB did not come as a surprise.
Jose Mari Lacson, head of research at stockbrokerage Campos, Lanuza & Co., noted that San Miguel had earlier announced that it was bringing in a foreign strategic partner into SMB.
Kirin bought into San Miguel early this decade, long before San Miguel decided to embark on businesses outside of beverage and food. San Miguel spun off SMB in 2007.
Lacson said Kirin’s entry plan was likely in line with its drive to expand further as a regional player. In 2007 it bought San Miguel’s Australian dairy and juice manufacturer National Foods for $2.6 billion.
If Kirin succeeds in a buy-in, it may have to make a tender offer to SMB minority shareholders, said Joseph Roxas, president of Eagle Equities Inc.
Under local securities regulations, a company buying at least 35 percent of a listed company must offer the same deal to minority shareholders.
A question among some analysts is whether Kirin would keep its stake in San Miguel. In the past, a key San Miguel stockholder, the retail tycoon Henry Sy, unloaded his stake in San Miguel and invested in SMB.