SMC plans solo bid for United Biscuits

MANILA, Philippines - San Miguel Corp., the Philippines’ most diversified conglomerate, said it was planning a solo bid for British snacks maker United Biscuits, owner of brands such as Jaffa Cakes and Twiglets.

The potential acquisition is a positive move given San Miguel’s expertise in its traditional food and brewery businesses, though analyst say they are worried about the group’s high debt levels.

“No need for partner,” San Miguel president Ramon Ang said in a mobile text-message to Reuters on Friday when asked if the group was considering a joint bid with other firms.

United Biscuits’ private equity owners, Blackstone Group and PAI Partners, have been working on plans for a sale or a public share listing by the end of the year. The auction for United Biscuits is reported to be worth two billion pounds ($3.25 billion).

Freya Natividad, investment analyst at Papa Securities Corp. in Manila, said buying into United Biscuits would diversify the product line of San Miguel’s subsidiary San Miguel Pure Foods Co. Inc., which is into fresh and processed meats, commercial feeds and flour.

“It makes business sense for San Miguel to go into this type of business because it has synergies with what they have learned in the food and brewery business,” said Luis Limlingan, head of business development at Regina Capital Development Corp. in Manila.

However, Limlingan said he was wary on where San Miguel would source the required cash for the acquisition.

The group is already highly-leveraged, Papa Securities’ Natividad said. As of end-June, San Miguel had P787.7 billion  ($17.91 billion) in total liabilities while total assets stood at P1.2 trillion.