SMC seals largest equity deal in PH

MANILA, Philippines—Shares of San Miguel Corp., the country’s largest food and beverage firm, ended slightly below the offer price of its $970-million issue—the largest equity deal in the local stock market to date, and the largest share sale in Southeast Asia in over 10 years.

At the end of trading Thursday, the conglomerate’s shares stood at P109.50 apiece compared with the selling price of P110 amid weak appetite for stocks worldwide.

Despite this, San Miguel president Ramon Ang urged investors to hold on to their shares, which he described as “undervalued.”

“They should hold on to these shares because they are very valuable,” he told reporters after Thursday’s ceremonies at the Philippine Stock Exchange (PSE).

Before a trading halt ahead of the offer period last month, San Miguel’s shares stood at P153.

The San Miguel chief pointed out that the company is now in full compliance with the PSE’s requirement for listed firms to have publicly traded shares equivalent to at least 12 percent of their total outstanding equity.

“With this issue, our free float is now close to 15 percent,” he said. Before the share sale, San Miguel’s free float stood at only 8 percent.

Ang drew parallels with the 2008 initial public offering of its subsidiary, San Miguel Brewery Inc., which struggled with its market debut of P8 per share, but now trades at P30 apiece.

Earlier this year, investors drove up the company’s share price on speculation a push into higher-return energy, transport and telecommunications businesses would boost earnings.

San Miguel and controlling stockholder Top Frontier Investment Holdings Inc. sold shares at P110 each. The bonds that are convertible to shares offer an annual coupon of 2 percent and a conversion premium of 25 percent to the offer price.

The foodmaker said it had set aside 189.1 million common shares from its treasury for the $600 million convertible bonds, sold to overseas investors and with a three-year maturity.

San Miguel will use the proceeds from the fundraising to finance infrastructure projects while Top Frontier will repay loans from its own investors.

The company, which started as a brewer in 1890, had about $2.9 billion in cash at the end of 2010.—With a report from Bloomberg

Read more...