Pure Foods bidders down to 2

MANILA, Philippines - Gokongwei food manufacturing concern Universal Robina Corp. and the consortium of the Campos family and Century Pacific Group of Companies reportedly emerged as the two final bidders for a minority but strategic stake in San Miguel Pure Foods Co. Inc., sources said.

Last Friday, diversifying conglomerate San Miguel Corp. announced it has narrowed the list of bidders for its stake in Pure Foods from five to two but didn’t name them.

Sources said US-based private equity fund Carlyle Group has backed out from the race allegedly due to valuation issues. The other company that submitted a bid for Pure Foods was the Cebu-based Aboitiz clan.

Carlyle and other bidders reportedly had valued Pure Foods at about $1 billion or less while San Miguel president and chief operating officer Ramon S. Ang believes that the food firm, which leads the hotdogs market, is worth more than that.

Ang earlier said Pure Foods had an estimated enterprise value of around $1.8 billion. 

San Miguel said the two bidders would conduct further due diligence prior to final negotiations. JP Morgan is San Miguel’s financial adviser.

Pure Foods had a market capitalization of P57.5 billion as of Friday’s close, which would value the 49-percent stake at around $650 million or P30.55 billion. It closed at P345 each share Friday.

Shares of JG Summit, the parent firm of URC, rose three percent Friday on speculation that the group is likely to acquire the block of Purefoods shares up for sale.

Founded in 1954, URC is involved in a range of food-related businesses, including the manufacture and distribution of branded consumer foods, production of hogs and day-old chicks, manufacture of animal and fish feeds, glucose and veterinary compounds, flour milling, and sugar milling and refining.

URC’s branded consumer foods segment distribute a diverse mix of snack, chocolate, candy, biscuit, bakery, beverage, noodles and tomato based products.

On the other hand, the Campos family owns drugstore giant United Laboratories Inc. and NutriAsia Group, which produces and markets sauces and condiments including soy, fish, tomato, hot, sweet chili, and white and cane vinegar, banana ketchups, sweeteners, and broths as well as refined palm, corn, and soya oils.

Meanwhile, the Century Pacific Group produces and distributes canned tuna and sardines under the brands Century Tuna, Bluebay, 555 and Fresca. It is also processes canned corned beef, meat loaf, beef loaf and luncheon meat under the brands Argentina and 555.

The Century Pacific group likewise distributes liquid milk and powdered milk under the brands Angel and Birch Tree.

 The sale of a significant stake in Pure Foods, which holds the San Miguel Group’s processed meats, poultry, livestock, feeds and dairy operations, would help fund the conglomerate’s acquisition spree as it aggressively moves into faster-growing industries.

San Miguel obtained shareholder approval to sell more than 51 percent of its core businesses as it diversifies into power, mining, telecommunications and infrastructure.

As of end-March this year, San Miguel had P121.07 billion in cash and near-cash assets.

Pure Foods, which holds 44 percent of the local poultry market and 63 percent of hotdog sales, posted record earnings of P2.6 billion last year on sales of P75.04 billion. In 2008, net income stood at P77.19 billion.

For this year, Pure Foods’ net profit is seen to rise 10 to 15 percent.