Philippines: SEC dismisses claim against San Miguel’s share swap

The Securities and Exchange Commission of the Philippines (SEC) has disclosed on Tuesday its decision in the case entitled “Josefina Multi-Ventures Corporation vs. San Miguel Corporation (SMC), San Miguel Food and Beverage (SMFB), and Ginebra San Miguel.” The SEC dismissed the petition filed by Josefina Multi-Ventures Corp. to nullify a share swap transaction between SMFB and SMC for lack of merit.

In November 2017 SMC announced to bundle its total food, beer and liquor business into a single entity (, 7.11.2017). As a consequence the business was consolidated in a 336.35 billion pesos ($6.55 billion) share-swap transaction into San Miguel Pure Foods Co., which was renamed as San Miguel Food and Beverage (SMFB).

Up to that time San Miguel Pure Foods was a company with businesses mainly in animal feeds, fresh chicken, fresh meats to processed meats, dairy, spreads, oils, biscuits, ice cream, coffee and jelly snacks. After the consolidation the newly merged company expanded its primary purpose to include also alcoholic and non-alcoholic beverages in its product line.

In August last year SMC revealed plans to sell 20% of recently restructured food and drinks business through a public offering. The proceeds were intended to fund a major expansion program. As communicated at that time, San Miguel Corp. and its beer unit San Miguel Brewery (SMB) were planning to build 10 new breweries with an annual capacity of 1-2 million hectoliters each in the next two years (, 18.7.2018) Each brewery will cost at least $100 million, summing up to a total investment of least $1 billion, according to San Miguel’s Chief Finance Officer Ferdinand K. Constantino. One of the breweries will be built on the West coast of the United States (, 1.6.2017) to target the 4 million Filipino Americans, which are estimated to live in the US. (, 18.7.2018)

One month after the plan for a public offering was revealed, Josefina Multi-Ventures Corp., a minority owner of Ginebra San Miguel, submitted a petition to the SEC saying, the conglomerate should have made a tender offer to all the minority owners of the company when the deal was made this year. This put the public offering on risk.

However, another month later in October 2018, SMC announced to sell only 43,6% of the approved shares, which will cut the proceeds to  USD 920 million, which is far less than the initially intended USD 3.6 billion. Reasons were said to be the unfavorable stock market conditions as a consequence of trade tensions between the United States and several Asian countries above all China (, 18.10.2018)

San Miguel Corporation (SMC) was originally founded in 1890 as a single brewery in the Philippines. The Company has since then transformed itself from a beverage, food and packaging business into a diversified conglomerate with businesses in fuel and oil, energy, infrastructure, and banking industries.

The Company's product portfolio includes beer; spirits; non-alcoholic beverages; poultry; animal feeds; flour; fresh and processed meats; dairy products; coffee; various packaging products; and a range of refined petroleum products.

SMC has strategic partnerships with international companies, among them are Kirin Holdings Company for beer; Hormel Foods International Corporation for processed meats; Nihon Yamamura Glass CompanyFuso Machine & Mold Mfg. Co. and Can-Pack for packaging products; and Korea Water Resources Corporation for its power business.

The Company's subsidiaries include San Miguel Brewery, Ginebra San MiguelSan Miguel Food and BeverageSMC Global Power Holdings Corp., SEA Refinery CorporationSan Miguel Holdings Corp., and San Miguel Properties.

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