SMC divests entire stake in Del Monte for $150M

Food and beverage giant San Miguel Corp. (SMC) has sold to its joint venture partner its entire stake in a holding company that controls Singapore-listed pineapple canner Del Monte Pacific Ltd. (DMPL) for $150 million (P7.2 billion).

Sources privy to the transaction said the move was intended to allow SMC to buy back its shares through the purchase of the Government Service Insurance System’s shareholdings in SMC, Southeast Asia’s largest food and beverage conglomerate.

The GSIS has sold its six percent stake SMC for about P14 billion as part of a realignment of its portfolio,

In a statement, SMC said the Campos family’s NutriAsia Group acquired its 42.2-percent stake in NutriAsia San Miguel Holdings, which wholly owns NutriAsia Pacific that in turn owns 84.5 percent of DMPL.

NutriAsia San Miguel Holdings is the joint venture company set up by SMC and the Campos group in December 2005 after acquiring control of DMPL in a deal valued at $420 million.

SMC president Ramon Ang said the divestment was "consistent with our plan to drive growth for our company by concentrating our resources in areas where we have full control and the strongest competitive positions."

"Focus and execution are going to be our priorities moving forward," he added.

Ang said SMC will continue to partner with NutriAsia in the areas of potential mutual interest such as packaging and distribution and the development of products for SMC’s subsidiary, National Foods Ltd., for the Australian and New Zealand markets.

DMPL owns the Del Monte brand in the Philippines, where it enjoys leading market shares for pineapple juice, juice drinks, pineapple solids, mixed fruits, tomato sauce, spaghetti sauce and tomato ketchup, and also markets products under its second-tier brand, Today’s.

It also owns the Del Monte brand in the India sub-continent and produces a juice line in China.

"We’ve benefited from the year in which San Miguel and the NutriAsia Group worked closely to strengthen and increase the value of the Del Monte business. Our improved competitiveness is evident in our robust performance for 2006. We achieved good top line growth with many of our business segments posting net sales increases, particularly in the second semester, " said DMPL managing director and chief executive officer Joselito D. Campos Jr.

After three years of consecutive profit declines, DMPL reported a 13 percent growth in net earnings last year as revenues reached an all-time high of $243.4 million. Net profit amounted to $21 million.

In February, SMC sold its entire 65-percent stake in Coca-Cola Bottlers Philippines Inc. to the Atlanta-based Coca-Cola Co. for $590 million.

SMC is 20 percent owned by Kirin Brewery Co. Ltd. of Japan and 10.8 percent owned by SM Investments Corp., the listed investment holding company of retail tycoon Henry Sy.