SMC food unit eyes add’l share sale next year

MANILA, Philippines - The food and beverage arm of diversified conglomerate San Miguel Corp. (SMC) plans to pursue next year its planned share sale to boost its public float to as much as 49 percent.

Fresh capital from the planned follow-on offering would support food-related acquisitions of San Miguel Pure Foods Co. Inc. (SMPF), which is also beefing up its value-added business, an executive said.

“We’re still working on [the follow-on offering]. We’re really considering because our public float is just 15 percent,” SMPF president Francisco Alejo III said last week.

Alejo said SMPF is hopeful of completing its share sale next year, depending on the attractiveness of raising capital from the stock market.

In November, SMC sold a 15-percent stake in SMPF to institutional investors for P240 each. The deal raised P6 billion and allowed SMPF to comply with the 10 percent minimum public ownership requirement of the local bourse.

Alejo said the ideal public ownership level for SMPF is 45-49 percent, with majority still controlled by conglomerate SMC.

The food and beverage giant is also open to a partnership with other companies.

“We will consider if there is an interested party which can provide inputs in running the food group,” Alejo said, adding that the company is looking at selling shares higher than the P240 per share during its last transaction. Shares of SMPF closed at P230/share on Friday, up from P226.4/share a day ago.

“We hope it will be something better than that because our results are better,” Alejo said.

New capital would support the expansion of SMPF, which is into the production of poultry and livestock feeds (B-Meg); flour (San Miguel Mills); and canned goods and processed meat (The Purefoods-Hormel Co. Inc.).

“There are also opportunities for acquisition. We are also considering expanding the business in fast moving consumer goods on food,” Alejo said. So far, SMPF holds several food brands like Magnolia, Pure Foods and Monterey.

Fast moving consumer goods would make use of the distribution network SMPF has already created with supermarkets and groceries.

“Our interest is really on food, either the same category we are in today or new categories which will be able to provide synergies within the company,” Alejo said.

The acquisition might involve local or foreign firms, Alejo said.

“We are already in the branded value-added business. Directionally, that’s what we’d like to do, to increase the value-added business relative to commodity,” he said.

SMPF is also preparing for the Association of Southeast Asian Nations Economic Integration in 2015.

“We’re scouting the market. We’re looking at either being able to export our own products or opportunities to bring in products that can compete here locally,” Alejo said.

In the nine months to September, net income attributable to stockholders of SMPF fell six percent to P2.74 billion from P2.29 billion but net sales inched up three percent to P71.41 billion from P69.35 billion a year ago.

“Saleswise, I think it will be double digit (growth this year),” Alejo said.