San Miguel eyes largest Indonesian coal firm

MANILA, Philippines - After a failed attempt to acquire a stake in PT Bumi Resources, San Miguel Corp. is trying its luck with another Indonesian coal firm, PT Adaro Energy Tbk.

In a text message, San Miguel president Ramon Ang said the food and beverage conglomerate “is in talks with Goldman [Sachs]” to buy a stake in Adaro Energy, the largest coal producer in Indonesia in terms of market value.

Ang declined to say how big a stake San Miguel would buy and for how much.

Goldman Sachs is one of three financial institutions handling the sale of a 17-percent stake in Adaro Energy to strategic investors. The stake is worth about $500 million.

Aside from San Miguel, investors from China, India, South Korea, Japan and Europe have also expressed interest in Adaro Energy.

Adaro Energy’s customers consist of 40 public utilities in 18 countries, including Thai Power and J-Power of Japan. It sells about 28 percent of its output domestically.

Indonesia is the world’s largest thermal coal exporter and its coal miners benefited from soaring commodity prices in the first half of 2008. However, the global economic crisis has led to a sharp drop in commodity prices.

Adaro Energy reported a 10-fold rise in net income last year to 887.2 billion rupiahs ($77 million) on the back of a 56 percent jump in revenues to 18.09 trillion rupiahs from 11.6 trillion rupiahs a year earlier.

Goldman Sachs, which reportedly owns 9.94 percent of Adaro Energy, was also San Miguel’s adviser for its diversification plan as the food and beverage giant seeks growth away from stagnating beer sales.

Among San Miguel’s recent investment initiatives include the purchase of the government’s remaining 27 percent stake in power retailer Manila Electric Co., an option to acquire up to 50.1 percent interest in oil refiner Petron Corp., and the acquisition of a 20 percent stake in Liberty Telecom Holdings Inc.

In another development, San Miguel disclosed that it completed the sale of 43.249 percent interest in San Miguel Brewery Inc. (SMB) to Japanese brewing firm Kirin Holdings Co. Ltd. for P59 billion or P8.841 each share.

San Miguel will use proceeds from the sale to pare down debts and fund new acquisitions as it diversifies iinto heavy industry such as power, mining, infrastructure and utilities.

The deal will still leave San Miguel with a majority 51 percent stake in SMB, which produces and markets San Miguel Pale Pilsen, Red Horse, San Mig Light and five other affiliated brands.

San Miguel announced it also completed yesterday the acquisition of Macondray Fibreboard Corp.’s 67 percent shareholdings in Mindanao Corrugated Fibreboard Inc. for P27.1 million.

This followed the purchase of Japan-based Rengo Co. Ltd.’s 30 percent interest in San Miguel Rengo Packaging Corp.

With the completion of the transactions, San Miguel now plans to consolidate the carton businesses under its packaging division.

San Miguel’s packaging group services many of the food, pharmaceutical, chemical, beverages and personal care manufacturers in Asia-Pacific, Middle East, Africa and US. It produces a wide range of products such as glass bottles, corrugated cartons, paperboard, paper pallets, plastic crates and pallets.