Nerves aside, SMC food and beverage unit shows grit in P34.1-B share sale

Conglomerate San Miguel Corp. (SMC) said it would expand its flagship food and beverage unit San Miguel Food and Beverage Inc. using funds from a recently concluded share sale.

SMC earlier this month raised about P34.1 billion through the sale of 400.9 million shares at P85 apiece in San Miguel Food and Beverage.

In a press conference on Monday, SMC president Ramon S. Ang said the money would be used to partially finance the construction of 10 beer breweries across the country, such as in Ilocos, Pangasinan and Cagayan de Oro.

To be built in three years, the facilities will double the firm’s capacity to over 40 million hectoliters. In addition, San Miguel Food and Beverage will build breweries in California, United States and Vietnam.

“The business of food and beverage and hard liquor is performing very well,” Ang said on Monday. “The volume growth is so big … and profitability of the business is very stable.”

The share sale comes amid difficult market conditions, with the benchmark Philippine Stock Exchange Index down by about 18 percent since the start of 2018.

San Miguel Food and Beverage had to cut the value of its offer several times. It initially planned to sell about a billion shares at P140 each, valuing the deal at around P140 billion.

Ang defended the decision to proceed, stating that the funds were necessary for expansion.

“In a bad market, only a good company can go out and do it,” Ang said.

He added San Miguel Food and Beverage could return to the market “in the next few years” or once conditions improve.

“We intend to offer more shares to the public,” Ang said, adding the company was targeting to increase its public float to reach around 30 percent. Shares of San Miguel Food and Beverage closed at P85 each, up 0.06 percent.