San Miguel eyes stake in P15-billion toll road project

MANILA, Philippines - San Miguel Corp. (SMC) has entered into a non-binding agreement to acquire a substantial stake in Private Infrastructure Development Corp. (PIDC), which won a government concession to build and operate the P15-billion Tarlac-La Union expressway project.

In a disclosure to the Philippine Stock Exchange yesterday, San Miguel said the parties agreed to execute and finalize a definitive agreement which shall be subject to government approval.

San Miguel president and chief operating officer Ramon S. Ang said the move is part of a strategy to diversify from the group’s core beer brewing business. “This is in line with our diversification plans and we’re happy to be a catalyst for the infrastructure needs of the country,”he said.

“The North to Central Luzon stretch is a potentially dynamic industrial corridor and the proposed expressway will make it easier and more cost effective to move goods and people from one point of Luzon to another. As a food and beverage conglomerate with one of the most developed distribution networks in the country, we have a strong interest in making it happen,” Ang said.

The 88.5-kilometer toll road project will extend from La Paz, Tarlac to Rosario, La Union, providing a seamless land link between Manila and the Northern Philippines. Once completed, it is estimated that the expressway will cut by half the travel time from Manila to Baguio.

San Miguel earlier confirmed it was in talks with DMCI Holdings Inc. to explore potential participation in the Tarlac-La Union expressway project. DMCI has a 34-percent equity in PIDC.

DMCI Holdings president Isidro Consunji earlier said San Miguel was eyeing a 49 percent stake in PIDC with an option to increase its holdings to 51 percent.

The Lopez Group’s First Balfour Inc. also owns a 34-percent interest in PIDC. However, it assigned its option to participate in the project to Metro Pacific Investments Corp. (MMC) following the sale of its stake in the operation of the North Luzon Expressway, the same road that will be extended to La Union.

MPIC was earlier reported to be not too keen on participating in the Tarlac-La Union expressway as it cited initial studies showing that the project would only be viable if it was extended only up to Gerona from Capas in Tarlac.

Aside from DMCI and First Balfour, other PIDC shareholders include construction firms EEI Corp., R.D. Policarpio and Co. Inc., D.M. Wenceslao and Associates Inc., J.V. Angeles Construction, J.E. Manalo and Co. Inc., New Kanlaon Construction Inc. and Rockford Development.

Construction of the Tarlac-La Union expressway began in September last year and is slated for completion in 2012. Once completed, travel time from Manila to Baguio will be reduced from six to three hours with a safe speed of 80 kilometers per hour. The project’s first phase is set for completion and operation by 2010 while full tollway operations by 2013.

San Miguel also said it is interested in acquiring the Philippine and regional operations of US multinational Dole Food Co., the world’s largest fruit and vegetable producer.

“We confirm that the company is interested in Dole Food Co. and its other units in the Asia-Pacific Region,” San Miguel said in a separate statement to the Philippine Stock Exchange.

San Miguel, Southeast Asia’s largest food and beverage outfit, did not say if there are ongoing negotiations or whether any are planned in the short term.

Dole’s Philippines unit grows pineapple and bananas in the southern region of Mindanao.

San Miguel’s agressive diversification has seen it acquire a minority stake in power utility giant Manila Electric Co. and an option to buy a majority stake in local oil refiner Petron Corp. It has also recently acquired 32.7 percent interest in Liberty Telecom Holdings Inc. and is now in discussions with the stockholders of Extelcom for the possible acquisition of a controlling stake in the company.

San Miguel also announced plans to venture into mining and water utilities via the controversial $1.1-billion Laiban Dam project in Tanay, Rizal.