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$3-B equity offering by Pure Foods seen in February 2018

/ 05:14 AM November 08, 2017

After the consolidation of its food and beverage business, conglomerate San Miguel Corp. is planning a $3-billion equity offering by its enlarged consumer arm to be known as San Miguel Food and Beverage Inc. by February 2018.

This is to comply with the minimum public float to be required by the Philippine Stock Exchange for continued listing on its bourse as a recently unveiled plan to consolidate the traditional businesses into San Miguel Pure Foods Co. Inc. will reduce the company’s free float to 4.13 percent.

The Securities and Exchange Commission (SEC) plans to direct the PSE to require listed companies to maintain a public ownership of at least 20 percent, double the existing minimum requirement.

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Asked how soon an enlarged Pure Foods would sell shares to comply with the minimum public ownership requirement, SMC president Ramon S. Ang said in a text message to the Inquirer yesterday that the target would be to undertake this by February.

Ang said the plan was to “sell 30 percent” and that this would translate to an offering size of around $3 billion.

On Monday, SMC announced a plan to spin off its traditional businesses into Pure Foods, creating a new local consumer powerhouse with the infusion of P336.35 billion worth of shares in its beer and other beverage businesses. Pure Foods will be renamed San Miguel Food and Beverage, which will own—in addition to its existing businesses—51.2 percent of beer giant San Miguel Brewery Inc. and 76 percent of Ginebra San Miguel Inc. (GSMI).

After the transaction, 83 percent of Pure Foods’ value will come from the beer business, said ATR Asset Management head of research Jose Mari Lacson, suggesting that this would effectively transform the company into a beer play.

“The positive about the transaction is that it creates this huge food and beverage conglomerate in Pure Foods (PF). At the end of the day though, it’s mostly SMB. So investors buying PF going forward are buying beer and not so much bacon and hotdogs. All three companies inside this food and beverage conglomerate are doing fairly well in terms of earnings growth. The question though is whether buying PF today or post merger, an investor is actually buying SMB at cheaper multiples,” Lacson said.

SMB voluntarily delisted from the local stock market in 2013.

Meanwhile, SMC announced yesterday the expansion of its footprint in the Australiasian region with the acquisition of Best Bottlers Pty. Ltd., a wine bottling and packaging facility in Victoria, Australia. This marks the third acquisition in Australia by SMC’s international packaging unit San Miguel Yamamura Packaging International Ltd. (SMYPIL).

The latest acquisition was done through SMYPIL’s Australian subsidiary, San Miguel Yamamura Australasia Pty Ltd.

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Best Bottlers specializes in various formats of contract filling, including still and sparkling wines, cider, ready-to-drink and nonalcoholic beverages, including fruit juices.

Earlier this year, SMC’s packaging arm acquired Barossa Bottling and Portavin, both in Australia.

Best Bottlers is the group’s fifth acquisition in the region serving the wine industry. In the prior years, the packaging group acquired the assets of Endeavor Glass of New Zealand and the cork and wine closures business of Vinocor and Cospak, another major packaging provider.

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TAGS: Business, San Miguel Corp., San Miguel Food and Beverage Inc.
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