Food unit of San Miguel may issue shares in 2014

San Miguel Pure Foods Co. Inc., the food manufacturing and commodity arm of San Miguel Corp., may proceed with a follow-on share offer next year as it seeks acquisitions in higher-margin food segments, its top official said.

Pure Foods president Francisco Alejo III told reporters in a recent interview that the sale, which could increase its 14.6-percent public float to as much as 49 percent, would depend on market conditions and the need.

He said Pure Foods, which has a current market value of P38.3 billion, has yet to mandate any underwriter for the proposed deal.

The potential acquisitions come as the company recently sold its roughly 5-percent stake in Manila Electric Co., part of a 27-percent block that San Miguel Corp. sold off to the Gokongwei family’s JG Summit Holdings for P72 billion last month.

The Meralco shares were sold at an estimated P236 each, valuing Pure Food’s stake at about P14 billion.

Alejo said the deal with the Gokongweis would still close next month. The Meralco shares provided earnings of P494.71 million in the first semester, about a fifth of Pure Food’s pretax profit.

“Directionally, we would like to increase our value-added businesses, relative to commodity animal feeds, poultry and hog business,” Alejo said, while clarifying that they were still expecting the commodity side to grow.

The company’s value-added business includes core brands like Tender Juicy hotdogs, Purefoods Star Hotdog, nuggets and corned beef.

“We will also consider expanding our business into the fast-moving consumer goods and food. Our interest is really in food,” Alejo said.

He added that sales this year were on track to end higher compared to the previous year.

“Our November and December sales are really key to our business especially on hams, hotdogs,” he noted.

For 2014, growth in sales would be around 10 percent to 15 percent, Alejo said.

Pure Foods in the first nine months of the year posted consolidated revenues of P71.4 billion, up 3 percent. It said the increase was due to the improved performance of its branded value-added business, which saw higher sales volumes and prices.

The company’s operating income was up 14 percent during the period.

Pure Foods inaugurated this month its P3-billion Golden Bay Grains Terminal in Mabini, Batangas. The facility is expected to contribute to the country’s grain supply security and reduce transportation costs for the company, a separate statement showed.