SMC pursues big foreign acquisition

Manila Bulletin

By JAMES A. LOYOLA

June 9, 2011, 1:40am

MANILA, Philippines — Diversifying conglomerate San Miguel Corporation expects to seal an agreement for a major acquisition of an Asian company in July this year.

In an interview with reporters, SMC president Ramon S. Ang said the target company is one that SMC has been eyeing for a long time and they just could not let the opportunity pass even though the firm has shifted focus in its investment strategy from overseas expansion to domestic diversification.

While not naming the company or the industry its in, Ang said it is a company with ‘very big potential, very profitable and has a good network.”

“We can’t let this opportunity pass,” Ang said Tuesday at a briefing after San Miguel’s annual stockholders’ meeting.The target company in Asia is “very profitable and it has a big potential,” he said, declining to elaborate. San Miguel, a brewer for more than a century, plans to double its power- generation capacity in five to seven years, Chairman Eduardo Cojuangco told shareholders today.

Meanwhile, Ang said SMC will continue to fine-tune its power investments after SMC chairman Eduardo M. Cojuangco Jr. said the firm aims to double its power generating capacity in five to seven years.

Ang said that they are keeping an eye on the limit set by the EPIRA on ownership of power generation facilities, SMC may opt to sell its less efficient plants in favor of the acquisition of on more efficient power generators.

He added that they are also leaning towards hydro-electric plants for SMC’s renewable energy portfolio since other forms of renewable energy are too expensive and will just burden consumers.

Ang said SMC may also take the opportunity to selling a big chunk of its shares in San Miguel Pure Foods Company even though their immediate target is to sell just enough shares to comply with the Philippine Stock Exchange requirement of a 10 percent public float.

“We will sell more than 10 percent if there is an opportunity to do that within 2011,” Ang said adding that they may opt to do another secondary offering next year if they cannot sell more than 10 percent before the PSE deadline of November 30, 2011.

Ang said SMC is in the process of preparing for the follow-on offering of shares of all of its listed subsidiaries to comply with the PSE’s public float requirement.

In the case of San Miguel Brewery Inc. where SMC only has a 51 percent stake, Ang said they are still discussing with partner Kirin Brewery of Japan as to how they can both divest to meet the required public float.

However, Ang said SMC would like to keep control of SMBI so they have to come up with a formula that will ensure they retain control.

The company is preparing to sell shares in San Miguel Brewery and San Miguel Pure Foods Corp. along with other subsidiaries, to meet the stock exchange’s 10 percent minimum public ownership requirement, Ang said.

SMCl may dispose of more shares and keep controlling 51 percent stakes in the units if the opportunity arises, the president said. San Miguel sold shares and convertible bonds this quarter, broadening public ownership to 14 percent.

“With our new businesses, we have more diverse income streams and more paths to grow than ever before,” Cojuangco said. “There is a wealth of opportunities in infrastructure, as there is great demand for better roads and public transportation,” the chairman said.