What is set to become the largest share sale in Philippine history may become even bigger after San Miguel Corp.’s chief said he could offer as much as a third of the conglomerate’s soon-to-be-consolidated food and beverage businesses to the investing public.
In an interview, group president Ramon Ang said the new San Miguel Pure Foods Co. would have a minimum aggregate value of $12 billion based on the combined cash flows of San Miguel Brewery, maker of the firm’s flagship beer; gin maker Ginebra San Miguel Inc. and Pure Foods’ meat processing business.
“If we sell 20 percent, it’s $2.4 billion. If we sell 30 percent, it’s $3.6 billion,” he said, revealing a potentially larger offer size than the $1.5-billion offer that was originally proposed. “That’s the valuation based on cash flows.”
The San Miguel chief said the much awaited follow-on offering was being rushed to the market by the group, but added that “a lot of things” still needed to be worked out, including the timing of the three-way merger, reportorial requirements and regulatory approvals, as well as the holding of three separate stockholders meetings to obtain the approval of thousands of large and small shareholders.
“We expect to have the sale by the last quarter [of 2018],” he said, adding that San Miguel—the country’s largest conglomerate by assets—would offer the shares of its food and beverage group to the public regardless of market conditions by the time it was ready.
“Whatever the [market] condition, we will go and sell up to the required by law, whether it’s 15 or 20 percent,” Ang said. “To sell more shares because of investors’ interest, it will depend on the timing.”
The San Miguel chief said the 48-percent stake of Japanese beer maker Kirin would be excluded from the merger of the food and beverage units as only the local conglomerate’s 51-percent stake would be folded into Pure Foods.
The share sale is being organized by UBS, Morgan Stanley, JP Morgan, BDO Unibank and Bank of the Philippine Islands, according to company officials.
The previous record holder for largest equity share sale in the country was the $912 million raised by the LT Group Inc., the holding firm of tycoon Lucio Tan in 2013.
Ang said he envisioned the conglomerate to be eventually composed of five publicly listed firms: the food and beverage business under Pure Foods; the power generation business under SMC Global Power; the toll roads and airport businesses under San Miguel Infrastructure; Petron for the group’s petroleum and petrochemical businesses, and a yet-to-be-decided fifth firm which could hold the group’s interests in mining, property, cement manufacturing, banking or tourism-related services.