SMC seen willing to pare down stakes in core units

San Miguel Corp. is willing to pare down its interest in all core businesses such as food and power generation but keep a 51-percent simple majority control in each.

Proceeds from the prospective sale would add to funds to acquire new businesses with good cash flow and potential for future growth, SMC president Ramon S. Ang told reporters.

Energy and infrastructure are among the recent additions to SMC’s portfolio. “We’re at the moment engaged in active negotiation for an energy firm,” Ang said, adding that the interest being considered by the conglomerate had $5 billion in equity value.

Asked how soon this might be closed, Ang said: “It’s not our decision. It’s the decision of the seller. At the moment, the seller is of course trying to maximize value.”

Food unit San Miguel Purefoods Co. Inc. is one of the core units where SMC may pare down its stake. During the company’s stockholders’ meeting last Friday, Purefoods president Francisco Alejo III said the company was studying to increase its public float, which stood at 15 percent.

Alejo added that Purefoods, which has operations in Vietnam and Indonesia, was looking at the possibility of expanding its operations in Indonesia to harness opportunities from the neighboring country’s 260 million population.

“The plan is to fully utilize and expand plant operations in Indonesia,” he said.

Purefoods has meat-processing operations in Indonesia. The San Miguel group also has brewery operations in China, Hong Kong and Thailand. It has a liquor distillery joint venture in Thailand. In Malaysia, the group has packaging operations on top of the downstream oil business acquired from Exxon Mobil.

In Taiwan, the group has sales operations and a packaging sales unit in Australia.

The increase in Purefoods’ public float could happen this year, said SMC chief finance officer Ferdinand Constantino. “The greater the public float, the more active trading there will be. Many big investors are looking at companies with big public float, where they can get in and out more flexibly,” Constantino said.

“To sell more I think it’s not a problem,” added Ang. “I think we can sell more because a lot of investors are interested in the company, as long as we keep majority. It’s a very good business, with very good margin. Our meat processing facility in Cavite is one of the most modern in the world.”

Meanwhile, Ang said PAL Holdings was working to comply with the 10-percent minimum public float requirement to remain listed on the Philippine Stock Exchange. Trading on PAL Holdings, which had a meager 0.55-percent public float, was suspended beginning Jan. 2 this year. If after June 30 this year PAL Holdings remained non-compliant, its shares would be delisted effective July 1.

After their partnership in the airline business, Ang said San Miguel and Lucio Tan groups might enter into “many, many” more alliances.