Intellasia News Services -- San Miguel plans to raise $800m selling units

San Miguel plans to raise $800m selling units
Source: 15-MAY-2009 Intellasia | Bloomberg
15 May, 2009 - 7:00:00 AM
San Miguel Corp., the largest Philippine food and drinks company, may raise $800 million to expand and repay debt by selling breweries in China and Vietnam and shares in a packaging business.

The overseas beer unit may be sold this year and an initial public offering for the packaging arm will be held by 2010, President Ramon Ang said in Manila late yesterday.

Chair Eduardo Cojuangco has been selling assets to raise funds to finance expansion into faster-growing industries such as energy and mining. Disposals announced this year will add 97.7 billion pesos ($2 billion) to the $4 billion amassed from offloading businesses including Australia's National Foods Ltd and the Philippine bottler of Coca-Cola.

"San Miguel is mutating into a different beast that management hopes will be stronger in taking advantage of opportunities and give it higher returns," said Alex Pomento, Manila-based strategist at Macquarie Group Ltd "San Miguel is betting it can do this by turning into an investment company."

The international beer business will be sold to unit San Miguel Brewery Inc. for between $600 million and $700 million, Ang told reporters yesterday. San Miguel's international beer venture is composed of six breweries in China, Indonesia, Thailand and Vietnam.

Overseas Sales

Overseas sales accounted for 12 percent of San Miguel's 168 billion pesos revenue last year.

Operating income at San Miguel's packaging venture grew 64 percent to 567 million pesos in the first quarter on sales of 5 billion pesos.

San Miguel Class A shares, which are reserved for Filipinos, fell 1 percent to 50 pesos at 9:41 a.m. in Manila trading. That trimmed its climb this year to 23 percent, compared with 20 percent for the benchmark Philippine Stock Exchange Index.

San Miguel shareholder Kirin Holdings Co. had in February said San Miguel Brewery may buy its parent's international beer business, without saying what the purchase price may be.

Kirin has agreed to take a 43 percent stake in San Miguel Brewery for 58.9 billion pesos, partly funded by the sale of its 19.9 percent holding in San Miguel Corp. for 39.61 billion pesos. Kirin, Japan's biggest beverage maker, will also offer to purchase more San Miguel Brewery stock from investors to increase its stake to 49 percent.

Cojuangco's Plan

San Miguel Corp.'s asset sales are part of a plan by Cojuangco to revamp a company that started as a brewery in 1890.

San Miguel, which has over 15,000 employees in over 100 facilities in Asia Pacific, has agreed to buy shares in Manila Electric Co. and take control of Petron Corp.Manila Electric is the nation's largest power retailer and Petron is the biggest local oil refiner.

About 10 percent to 14 percent of San Miguel's packaging unit will be offered to the public and may raise $100 million for the parent company, Ang said.

San Miguel Properties Inc., the developer controlled by San Miguel, may sell a real-estate asset to boost profit to 1 billion pesos this year, Ang said. The builder posted a record 1.19 billion peso net income last year boosted by gains from the sale of a property.

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