Wednesday, 29 July 2009

San Miguel reaps rich rewards for its audacity

By Roel Landingin
Financial Times

San Miguel, the Philippine food and drinks maker that is diversifying into heavy industry, displayed extraordinary boldness when it acquired large stakes in two of the country’s biggest companies in October last year just as Manila’s stock index fell the most in more than two decades.

Now San Miguel is displaying the same audacity in its assessment of the success of its acquisitions in new businesses ranging from electricity distribution, petrol refining and telecommunications.

“Overall, if you look at it, the diversification is very successful,” Ramon Ang, San Miguel president, said last week.

San Miguel bought 27 per cent of Manila Electric (Meralco) in October last year at 90 pesos a share, twice the price of 44.50 pesos at the time. But Meralco’s shares have quadrupled this year, on Tuesday surging by a fifth to close at an all-time high of 272.50 pesos.

Investors are speculating that Meralco’s two biggest owners – San Miguel and Philippine Long Distance Telephone – could buy each other out and make a tender offer to other shareholders.

Mr Ang says San Miguel’s acquisitions, which were announced shortly after the global financial crisis took a turn for the worse, helped infuse life into an otherwise lethargic stock market.

Few companies can match such impact, or daring.

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