Philippines conglomerate San Miguel to combine food, beverage arms

Philippine conglomerate San Miguel on Monday said it would combine its food, beer and liquor units into a single entity under a 336.35 billion pesos ($6.55 billion) share-swap transaction.

In disclosures to the Philippine Stock Exchange, the SMC said it will be executing a deed of exchange between SMC and SMPFC to convey SMC's 7.86 billion SMB shares and 216.97 million GSMI shares to Pure Foods as payment for 4.24 billion new SMPFC shares.

The transaction was valued at P336.35 billion by ING Bank.

"After the SEC approves the amendments to deny pre-emptive rights for issuances of common shares and reduce the par value of common shares, and the company's authorized capital stock is increased, it can and will have enough common shares to issue to SMC for the share swap transaction, as well as conduct a subsequent follow-on share offering to comply with the minimum public ownership requirement of the exchange", SMPFC said.

SMPFC will be amending its articles of incorporation to expand its primary objective to include engagement in the alcoholic and non-alcoholic beverage business and change its corporate name to San Miguel Food and Beverage Inc.

A tender offer for San Miguel Brewery and Ginebra San Miguel common shares held by minority shareholders was also authorized by the Pure Foods board, if required by relevant laws and regulations. It represents six times the market capitalization of San Miguel Pure Foods. It also eclipses that of Universal Robina, a unit of JG Summit Holdings, which is now the most valuable food and beverage company in the Philippines with a market capitalization of 313 billion pesos.

San Miguel told the Nikkei Asian Review the move is aimed at making it "easier for investors" to buy into the companies. He did not elaborate.

Pure Foods' share price rose to the 50 percent daily limit, closing the day up P154 per to P462, while San Miguel rose by P5.50 or 5.43 percent to P108.60. The company put this down to "creative marketing and sales executions", which allowed it to push into new geographical regions. It also sought tax exemptions from authorities and clearance from Philippine Competition Commission.

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