SMC to complete sale of liquor unit this year

MANILA, Philippines - San Miguel Corp. (SMC) expects to complete the sale of its hard liquor unit Ginebra San Miguel within the year as part of a divestment program aimed at fuelling its diversification into the more profitable infrastructure and heavy industry.

SMC president and chief operating officer Ramon S. Ang said San Miguel has started discussions for the sale of Ginebra to another subsidiary, San Miguel Brewery Inc., which is 48-percent owned by Japanese brewer Kirin Holdings Co.

GSMI shares have been steadily rising in the past two weeks. From only P23.50 on April 22, the company’stock has surged to P33 each share last Friday on expectations San Miguel would undertake a tender offer soon.

A tender offer is triggered if a company buys more than 35 percent stake in a listed company, requiring it to make an offer for the remaining shares of the target firm.

Ginebra swung to profitability last year, chalking in a net income of P701 million as against a net loss of P279 million in 2008. Sales rose 27 percent to P19.5 billion, mainly driven by strong demand for the company’s GSM Blue and Gran Matador products

San Miguel earlier said it planned to raise $1 billion from the sale of assets, which include stakes in its packaging ventures and in canned meat and hotdog maker San Miguel Purefoods.  

The conglomerate, which has generated about $3 billion from asset sales since 2008, intends to continue its diversification into infrastructure development, power, telecommunications and mining.

San Miguel has already bought stakes in power distributor Manila Electric Co., Liberty Telecommunications Holdings Inc., a couple of power plants and coal-mining companies, a tollroad project, and an option to acquire a controlling stake in oil giant Petron Corp. It has also been offered stakes in other infrastructure projects including tollroads and airport.

The company is also on the lookout for large oil, coal, natural gas and mining acquisitions abroad to further spur growth.

Among the major transactions executed by the company to finance its push into heavy industries include the sale of a 65 percent stake in Coca-Cola Co for $590 million, and the sale of a portion of its interest in San Miguel Brewery.

San Miguel, which saw its 2009 net profit surge three-fold to a record P57.8 billion, is seeking shareholders’ approval to sell down more than 51 percent of core businesses and create a common stock to facilitate the entry of more foreign investors in the country.