Thursday, 18 March 2010

San Miguel turns down Kirin bid to control beer operation

Ian Sayson and Cecilia Yap
Bloomberg
Manila Standard
http://www.manilastandardtoday.com/insideNews.htm?f=2010/march/17/news1.isx&d=2010/march/17

SAN Miguel Corp. has ruled out selling a controlling stake in its beer operations to Kirin Holdings Co. of Japan, even as it prepares to unload its food and packaging businesses to raise $1 billion to finance expansion and acquisitions.

The brewery was “not available” for sale, said Ramon Ang, San Miguel president, after Kirin, which owns 48 percent of San Miguel Brewery, said it was interested in taking majority control.

Ang said the sale of San Miguel’s other assets would be used to accelerate its expansion into infrastructure, energy, telecommunications and mining.

San Miguel might spend $2 billion on expansion and acquisitions within a year, Ang said.

Ang and company chairman Eduardo Cojuangco have raised more than $5 billion selling assets since 2007 and had P153 billion in cash at their disposal as of September.

The country’s second-biggest listed company, which started brewing San Miguel Beer more than a century ago, is expanding into industries that Ang has said have return on equity about triple that of its “traditional” businesses.

“We are interested in anything that will add value,” Ang said. “Our focus is infrastructure, energy and mining.”

San Miguel had offers for and planned to sell 49 percent each of canned-meat and hotdog maker San Miguel Pure Foods Co. and its packaging business, he said.

It also planned to sell Ginebra San Miguel Inc. to San Miguel Brewery, he said.

Last week, Senji Miyake, incoming president of Kirin, said his company would like to take a majority in San Miguel Brewery if its parent were willing to sell.

“We’re not in a hurry,” he said, declining to say whether they were in talks.

Kirin last year bought its stake in San Miguel Brewery, which controls 95 percent of the Philippine beer market. The venture bought the international beer operations from San Miguel Corp. for $300 million in January to gain access to China and other parts of Southeast Asia.

“There is no way we can’t make use of San Miguel’s strong brand in Southeast Asia,” said Miyake. “Our priority is Southeast Asia, as its potential is a big as China.”

San Miguel is accelerating its expansion as Top Frontier Investment Holdings Inc., owned by the food maker itself and two of its directors, has control of the voting rights to 86 percent of its shares. Top Frontier, whose shareholders include San Miguel directors Roberto Ongpin and Inigo Zobel, has initiated a tender for the rest of the food maker at P75 a share.

Top Frontier bought 28 percent of San Miguel in November and earlier this month completed the purchase of Q-Tech Alliance Holdings Inc.’s shares in the company. San Miguel, which owns 49 percent of Top Frontier, said in January the consolidation of ownership would ensure continuity and stability for the company’s strategic plan.

Ang said Top Frontier, after the conclusion of the tender offer, would sell down its stake in San Miguel within a year.

San Miguel, which opened its brewery in 1890, eight years before the Philippines declared independence from Spain, has raised $2.44 billion from the sale of beer assets in the last year.

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