$1-B in fresh acquisitions eyed this year

Stockholders of food and beverage giant San Miguel Corp. (SMC) voted yesterday to increase the company’s capital stock, paving the way for the entry of Japan’s leading brewer and one of Asia’s largest conglomerates – Kirin Brewery Co. Ltd.

With the additional $536-million infusion from Kirin, SMC will be in a stronger position to pursue up to $1 billion in fresh acquisitions this year, SMC vice chairman Ramon Ang disclosed yesterday.

In a special shareholders meeting, SMC stockholders approved the P7.5-billion expansion of its authorized capital from P15 billion to P22 billion, thus allowing Kirin to subscribe to a 15-percent stake in the company.

Based on their share purchase agreement finalized last Dec. 14, 2001, Kirin will take in 442.56 million of SMC’s common class B shares from the newly-issued stocks at a price of P63 each, or a total of about $536 million (P27.88 billion).

Ang said SMC has set aside the amount for another major acquisition that will involve a local company in their same line of business – food and beverage manufacturing.

He said they expect to finalize the deal within two to three months.

In a span of just one year, SMC has acquired majority control of Coca-Cola Bottlers Philippines Inc., Pure Foods Corp. and Cosmos Bottling Co. SMC had to shell out around P30 billion for these purchases.

Ang said that with additional equity from Kirin, the company will boost its investible cash stock to about P38 billion, exclusive of the appropriated capital expenditure requirements set by the company this year for its working capital and expansion projects.

SMC presently has a capital base of P15 billion divided into 2.1 billion class A shares and 900 million class B shares, both with a par value of P5.

The transaction is scheduled to be closed through a block sale at the Philippine Stock Exchange (PSE) this March.

With Kirin’s entry, the Japanese group will be entitled to two board seats in SMC’s 15-man board of directors.

The government agreed to back the Kirin deal in exchange for SMC taking on five of its nominees on the company’s board.

The government votes on some 44 percent of SMC stock, while SMC chairman Eduardo "Danding" Cojuango votes on about 22 percent.

Kirin is seeking the deal to expand its hold in Asia while SMC is eyeing the Japanese brewer’s network to allow it to penetrate more markets in the region.

Due to the special meeting held yesterday, SMC will now hold its regular stockholders meeting in June, instead of the usual April/May schedule. In this meeting, the government nominees will then be formally elected to the board.