San Miguel sells Sugarland to LTDI for P1.56B

San Miguel Corp. (SMC) has sold its entire interest in juice maker Sugarland Beverages Corp. to its subsidiary La Tondeña Distillers Inc. (LTDI) to pave the way for the latter’s restructuring into a purely liquor company.

SMC chief finance officer and corporate information officer Ferdinand Constantino informed the Philippine Stock Exchange that SMC finalized the sale of its 49-percent stake in Sugarland for P1.56 billion last Friday.

"The sale is in connection with the restructuring of LTDI and its water and juice subsidiaries, prior to LTDI’ sale of its water and juice businesses to CCBPI and The Coca-Cola Company," Constantino said.

Early this year, SMC announced plans to spin off its non-liquor line under LTDI, a 67 percent subsidiary, into a separate entity that will be folded into the Coca-Cola group. SMC controls 65 percent of Coca-Cola Bottlers Philippines Inc. (CCBPI), with the remaining 35 percent held by the Atlanta-based The Coca-Cola Company (TCCC).

Based on the plan, Sugarland and two other subsidiaries, Metro Bottled Water Corp. and SMC Juice Inc., will be merged into LTDI as the surviving corporation. Afterwards, these business lines will be absorbed by CCBPI, which at the same time is working on the deal to purchase softdrink manufacturer Cosmos Bottling Corp. from the RFM group.

Although LTDI’s water and juice segments contribute 27 percent to total revenues, the company relies mainly on its hard liquor line which is its solid growth driver making up 73 percent of total sales.

"The sale of our non-liquor beverage business to CCBPI allows us to focus our resources and direct our capital and attention on our core hard liquor and related businesses," LTDI president Enrique Gomez Jr. said.

LTDI’s wines and spirit line boast of the flagship Ginebra San Miguel, Añejo Rum, Vino Kulafu, Tondeña Manila Rum, Oxford London Dry Gin, San Miguel Bravo Rum and Cordial Lime Juice.

Meanwhile, LTDI will give up the Magnolia brands of fruit drinks, Zip Juice Drink, Eight O’Clock, Ponkana, Ice Cold Mixers and the bottled water brands Viva!, FIRST and Wilkins.

The integration of the non-liquor brands into CCBPI will be further boosted by the impending acquisition of Cosmos, the country’s second biggest sofdrink company, with the addition of the Sarsi, Pop Cola, Cheers, Jaz Cola and Jolt brands.

Gomez added that the proceeds of the sale will strengthen the company’s balance sheet and allow it to reduce its debt and actively pursue expansion and growth opportunities, both in the domestic and regional markets. – Conrado Diaz Jr.