Philippines' largest company, San Miguel Corporation (SMC), announced on Tuesday to sell between 20 and 30% of its merged food and drinks unit in the fourth quarter. The company hopes to raise as much as $3.6 billion in what could be the country’s biggest share sale on record.
Last year the company bundled its food, beer and liquor business into a single entity under the name San Miguel Food and Beverage (inside.beer, 2017-11-07) Capital markets welcomed the move and pushed the parent’s shares up 21 percent in 2017 and another 27 percent so far this year.
“Old businesses are usually forgotten during diversification, but that didn’t happen in our case,” Ramon See Ang, since 1999 Vice Chairman of SMC and since 2002 also its President and Chief Operating Officer, said at a press meeting in Mandaluyong City, Philippines. “We continue to grow and remain bullish on this sector.”
SMC wants to use the money to profit from the Philippines’ strong growth, which has topped six percent annually in the past six years. The conglomerate wants to build a new 736 billion-peso ($14.15 bn) airport in Manila to be finished latest by 2022. Last week an official committee has approved SMC’s proposal for the airport as well several other projects. Still the project has to pass other hurdles before it can be officially assigned to SMC or other bidders.
Another project is the $5 billion expansion of a refinery, owned and run by Petron Corporation, the country’s largest oil refining and marketing company supplying more than a third of the country’s oil requirements. Since 2010 SMC holds a majority stake in Petron.
In 2008 SMC has started a major restructuring program and added infrastructure, mining, petroleum and power assets to its staple food and beverage businesses. Aim was to bolster revenues and to make the business less dependent from one sector of the industry.
As a consequence SMC sold in 2009 48.304% of the issued and outstanding shares of its subsidiary San Miguel Brewery (SMB) to Kirin Holdings Company from Japan. SMB acquired from SMC one year later also 100% of San Miguel Brewing International (SMBIL), a company with brewing operation in Hong Kong and China.
As already mentioned earlier, SMC consolidated last year in a share swap deal its core business by selling its beer unit SMB and its spirit divison Ginebra San Miguel to its food divison San Miguel Pure Foods Company and renamed it as San Miguel Food and Beverage. Despite the consolidation Kirin retained its stake in San Miguel Brewery.
Ang said on Tuesday he hopes to raise profit of SMC from 55 billion pesos ($1.06 bn) in 2017 to 65 billion pesos ($1.25 bn) this year with the bulk coming from its oil and the merged food and drinks business.