SMC launches bid for Aussie brewer

San Miguel Corp. has added Australian beer brewer J Boag & Son in its acquisition list following the purchase of an initial 14.9 percent from the company's major stockholders.

The Philippines' largest food and beverage company announced yesterday that it would pursue an off-market takeover bid for J Boag & Son, which carries a premium line of beer brands, for approximately A$92 million ($55 million).

The amount represents SMC's offer price of A$1.65 for each common share, a substantial 60.2-percent premium over the closing price of A$1.03 last Friday, April 14.

"San Miguel will also bid for all the outstanding options over J Boag & Son shares at commensurate prices and shares issued pursuant to the exercise of those options," a company statement to the Philippine Stock Exchange said.

SMC acquired 5.55 million shares or 10.3 percent of the issued shares from Philip Adkins, chairman and CEO and the largest shareholder in J Boag & Son. Adkins said he would sell the balance of his 26-percent share holdings in the company to SMC in the absence of a higher offer.

The remaining 4.6-percent stake or 2.5-million shares bought by SMC came from investment firm Rothschild Asset Management. SMC has designated JP Morgan to act as its financial adviser and Freehill Hollingdale & Page as legal adviser for the takeover bid.

J Boag & Son is the second Australian company bought into by SMC. In 1997, the Philippine giant completed a share swap with softdrink bottler Coca Cola Amatil Ltd. where it still holds 21.4-percent equity.

"San Miguel's acquisition of J Boag & Son represents a strategic investment in line with the company's thrust of building its brand portfolio and acquiring a controlling interest in investments that provide strategic fit with its core businesses," SMC said.

SMC said the takeover will provide access to a highly-efficient distribution system in Australian, as well as integrate J Boag & Son's products into SMC's own distribution system to be enhanced by a planned P10-billion trade and logistics hub in Southern Tagalog.

Australia is a part of SMC's missing link in its international brewing operations that now include four breweries in China (including Hong Kong), and a brewery each in Vietnam and Indonesia.

J Boag & Son holds a portfolio of well-known Australian and international premium beer brands, among them the flagship James Bog Premium Lager and StrongarmBitter. It is also the exclusive Australian distributor of Carlsberg and Samuel Adams. Aside from beer brewing, J Boag & Son also has interests in the hotel and restaurant business. In 1999, its total sales revenue was A$42.8 million ($25.8 million).

Australia's premium beer category represents four percent of the overall beer market and is seen as the fastest growing segment in the industry with a projected growth rate of over 15 percent in the medium term.