San Miguel plots Philippines future

The San Miguel Corporation plans to raise US$1 billion through sales of various subsidiary businesses to fund growth and acquisitions.

The Philippines’ largest food and drinks maker, and brewer of San Miguel beer for over a century, is looking to expand into infrastructure, energy, telecommunications and mining as part of a $2bn expansion plan.

The sales of the company’s stakes in its hotdog maker, packaging unit and gin distillery, would increase the amount raised since 2007 by president Ramon Ang and chairman Eduardo Cojuangco to $6bn.

Ang said: “We are interested in anything that will add value. This company will fly."

San Miguel, which controls 95% of the Philippine beer market, has so far received offers of 49% for its canned meat and hotdog maker, San Miguel Pure Foods and the packaging plant.

The brewery was described as “not available for sale” when Kirin Holdings expressed interest in increasing its 48% share.

The company instead plans to sell its gin distillery, Ginebra San Miguel, to its San Miguel Brewery.

In the past year the company has raised $2.44m from sales of its beer assets. The disposals helped drive a 173% increase in San Miguel’s nine-month profit to 57bn pesos.

With regard to its more recent ventures, the company is expected to announce the acquisition of gold, copper, nickel, iron and lead assets for its mining venture “soon”.

Ang also laid out the company’s plans for infrastructure, which include a railway that will run the length of the country’s biggest island, Luzon, a commuter train in Manila and expansion of an airport on Boracay Island.

"Within a year we will probably be done with our diversification strategy. It has to be that fast. The share price doesn’t reflect the true value of San Miguel," Ang explained.

Rupert Millar, 17.03.2010