Ongpin group acquires 28% of SMC for P64.3 billion

MANILA, Philippines - A group led by former Trade Minister Roberto V. Ongpin has acquired a 28-percent stake in diversifying conglomerate San Miguel Corp. for P64.3 billion, raising the possibility of a major ownership realignment in Southeast Asia’s largest food and beverage company.

In a statement released yesterday, Top Frontier Investment Holdings Inc. said it purchased the shares from San Miguel’s pension fund through a special block sale. The acquisition was funded through a combination of equity and foreign borrowings, it added.

Some 857.12 million of San Miguel’s shares (745.31 million A and 111.81 million B shares) were crossed at the Philippine Stock Exchange yesterday at a price of P75 each.

San Miguel’s A and B shares both closed at P69 yesterday, up by as much as 5.3 percent from Thursday’s finish.

Top Frontier’s major shareholders are Ongpin and business magnates Jose Campos and Inigo Zobel. Ongpin, along with Master Year Ltd., a foreign-owned company, holds around 20 percent while Zobel and Campos each account for 40 percent.

Ongpin said while the acquisition entitles Top Frontier to five board seats in San Miguel, it is the group’s consensus to maintain the current composition of the food, drinks and packaging company.

“San Miguel is a very sound investment, with a strong balance sheet to support the new business endeavors which are clearly the future engines of growth. We also recognize that San Miguel has a very strong management and highly competent people resource” Ongpin said.

“We have properly disclosed to San Miguel our participation in this acquisition. Our investment in San Miguel is a clear indication of our trust in the business and the current management. We expect it will be viewed in the same way by the investment community” he added.

The acquisition draws the group nearer to eventually acquiring a controlling interest in San Miguel through a mandatory tender offer for the rest of the shares of the food and beverage giant.

Ongpin owns 30 percent of Q-Tech Alliance Holdings Inc., which purchased the 20 percent stake of Kirin Holdings Co. Ltd. in San Miguel for P39.61 billion last May.

Given his participation in both Q-Tech and Top Frontier, Ongpin said he has initiated discussions with the other shareholders of the two companies to consider the merits of consolidating their investments in San Miguel. 

“Subject to the outcome of these discussions with the shareholders of both companies, a tender offer will be undertaken in accordance with law at a price of P75 per share,” Ongpin said in an e-mailed statement.

If they decide to move for a consolidation of their interests, the total shareholdings of both groups would reach 48 percent, or well above the mandatory tender offer threshold of 35 percent and would make them the biggest shareholder in San Miguel.

Under the tender offer rule, any entity or person who acquires at least 35 percent of a listed company must offer to buy out other shareholders at the same price agreed upon with the block seller.

The Ongpin-Campos-Zobel group is widely considered allied to San Miguel’s key officials. Last year, the group, through Global 5000 Investment Corp., bought a 10-percent stake in Manila Electric Co. (Meralco) held by state-owned pension fund Social Security System (SSS), and financial institutions Land Bank of the Philippines and Development Bank of the Philippines.

Global 5000’s phone number listed in documents filed with the Securities and Exchange Commission is the trunk line of San Miguel. 

Ongpin and San Miguel chairman Eduardo “Danding” Cojuangco were both allies of deposed President Marcos. 

Zobel is a director in San Miguel and its other units while Campos previously teamed up with San Miguel to buy pineapple processor Del Monte’s Pacific business.

Proceeds from the sale would strengthen San Miguel’s financial muscle and fund its planned acquisitions and existing businesses.

Ferdinand K. Constantino, San Miguel’s chief finance officer, said this is a welcome move as this is a reflection of their trust in San Miguel as a business as well as its people.

“San Miguel management believes that the new investors, given their varied business portfolio, will provide added value to the company in terms of strategic positioning moving forward. From the standpoint of the San Miguel Retirement Plan, San Miguel also confirms that the sale will improve the total value of the Fund for the benefit of San Miguel employees.”