"The capital infusion is a clear vote of confidence to SMC and the country. It is hard to imagine why any investor would commit capital, at a hefty premium for a minority interest, given the prevailing country and political risk," Asiasec noted.
Concluding that the entry of a strategic investor would make SMC a stronger company, the security firm commented that what is good for San Miguel should be good for all shareholders, and that this would be the perfect opportunity for the government to show their sincerity in promoting "political reconciliation."
San Miguel management, under its chairman and chief executive officer Eduardo Cojuangco Jr., deserves credit for persuading Kirin to invest $537 million for a 15-percent stake in San Miguel, Asiasec said.
Describing the Kirin buy-in as a "breakthrough deal," it noted that Cojuangco’s management made sacrifices not only to attract foreign inflow but also to forge a transaction for the benefit of SMC shareholders. "We see Mr. Cojuangco doing his part since he feels that he has a personal stake in the company. Despite the politics, there has been no doubt of the current management’s ability to deliver results that leads to higher shareholder value," the securities firm said.
San Miguel’s strategic partnership with Kirin would fasttrack SMC’s plan to expand regionally and take advantage, in particular, of opportunities in Vietnam and Thailand. Asiasec observed that mega-partnerships are becoming in vogue not just to strengthen brands but also to develop operating synergies. "We see this deal as enabling SMC to tap into the big Japanese and European markets without incurring much network expenses on its part," it said.
Asiasec likewise maintained that Kirin’s investment in San Miguel will not dilute the holdings of other stockholders, particularly the government-led CIIF (Coconut Industry Investment Fund) shares in SMC. "Even after the potential infusion of the strategic investor, the CIIF will still control 27 percent of SMC, which is the same level of ownership they had since 1998 or before the entry of Mr. Cojuangco," it said.