SMC unit seen hitting $12-B capitalization

Notwithstanding the overall stock market slump, San Miguel Food and Beverage (FB) Inc. has attracted strong interest from potential cornerstone investors and is thus likely to attain $12-billion market capitalization during its upcoming follow-on stock offering.

This was according to Ramon S. Ang, president of FB’s parent company San Miguel Corp. (SMC), who said he was “sure” that FB—the entity resulting from the union of San Miguel Brewery, San Miguel Purefoods and Ginebra San Miguel—would attain the targeted valuation of $12 billion.

“We will comply with the minimum public float of 10 percent but we think we may have to do 20 or 30 percent,” Ang said.

Ang said he expected FB’s follow-on offering succeeding despite the overall stock market downturn. The main-share Philippine Stock Exchange index has so far pulled back by 1,306.51 points, or 14.4 percent from the historic peak in January.

“Demand for this company is very strong. Even now, many want to come in as cornerstone investors,” Ang said, referring to institutions willing to take up a big portion of a company’s offering.

FB has been transformed into a new consumer powerhouse with the infusion of P336.35 billion worth of shares in beer and liquor businesses held by SMC. For some investors who look forward to the offering, this consolidation is effectively a backdoor listing of beer giant San Miguel Brewery, which will account for the bulk of revenues of the consolidated entity moving forward.

Upon approval by the Securities and Exchange Commission of an increase in its authorized capital, FB will issue 4.24 million new shares to SMC at P79.82 each. These shares are in exchange for SMC’s 7.86 billion common shares in San Miguel Brewery and 216.97 million common shares in Ginebra.