SM’s Henry Sy hikes stake in SMC to 11%

Fresh from its purchase of a 24.76-percent stake in Equitable PCI Bank, the family of retail tycoon Henry Sy has gobbled up an additional 4.6- percent stake in San Miguel Corp. for P9 billion, raising its shareholdings in the food and beverage conglomerate to 11 percent.

The transaction was effected yesterday through a series of block sales crossed at the stock market during the last minutes of trading. A total of 143 million San Miguel Class A shares were sold to the Sy group for P63 per share, worth a total P9.009 billion.

The sellers of the SMC shares were not named but only state pension funds Social Security System and Government Service Insurance System and San Miguel’s employees retirement fund are known to have such large share blocks.

Sources said the additional shares purchased are not enough to secure another board seat in San Miguel but some shareholders of the food and beverage conglomerate have reportedly expressed support to giving the Sy group an additional seat.

Through SM Investments Corp. (SMIC) the Sy group owns one board seat in San Miguel.

One board seat is equivalent to a six percent stake in the food and beverage group.

In a disclosure to the Philippine Stock Exchange, SMIC said its "increased investment in San Miguel is a testament to its growing optimism on the latter’s long-term potentials having built a solid domestic business base for its alcoholic and non-alcoholic beverages, food and packaging products where it is the recognized market leader."

SMIC has considered the recent expansion initiatives being taken by San Miguel.

"San Miguel has expanded its market reach overseas with its businesses in Greater China, Indonesia, Thailand, Malaysia, Vietnam and more recently, Australia," it said.

SMIC also backed San Miguel’s recent acquisition – Australia’s largest publicly-traded dairy operator National Foods Ltd. – which was bought for $1.5 billion.

"San Miguel’s latest purchase of Australia’s dairy leader National Foods Ltd. appears very promising given the latter’s strong potential to contribute significantly to San Miguel’s bottomline and cashflows going forward. This is also seen as a natural hedge against the volatility of the group’s domestic food business which is subject to the vagaries of the local market." SMIC said.

"Over the long haul, we expect San Miguel’s expanded international business operations to serve as its new platform for growth, hence improving its earnings prospects. This, in turn, should enhance shareholders’ values for San Miguel, which augurs well for SMIC," SMIC chief financial officer Jose T. Sio said.

The Sy group has interests in tourism, department store operations, financial services, and real estate development.

Last Wednesday, the Sy family acquired the Go family’s 180 million shares in Equitable PCIBank via the stock market. Each share was sold at P56.50, equivalent to a total of P10.2 billion and a 24.76 percent interest in the bank. The transaction also involved the purchase of a 10 percent interest in Equitable Card Network Inc. for about P600 million. Funding came from internally generated cash.