SMC acquires 49% of shareholder Top Frontier

MANILA, Philippines - In a move aimed at maintaining continuity of operations and safeguarding its interest, food and beverage giant San Miguel Corp. is acquiring 49 percent of its major shareholder Top Frontier Holdings Inc. at a still undisclosed price. 

Top Frontier, which bought a 28-percent stake in San Miguel last November, is owned by a group led by former Trade and Industry Minister Roberto V. Ongpin, businessman Inigo Zobel and condiments king Jose Campos.The holding company acquired a total of 857.12 million San Miguel shares from the San Miguel Retirement Plan at P75 per share wortha total P64.3 billion.

In a disclosure to the Philippine Stock Exchange, San, Miguel said its investment in Top Frontier was approved by its board of directors, premised on Top Frontier’s undertaking to pursue an orderly selldown of San Miguel shares in order to broaden the food, beverage and packaging company’s public float which currently stands at seven percent.

“The Board is confident that an investment by San Miguel in Top Frontier is in the long-term interest of the shareholders of San Miguel. This investment will ensure continuity of the ongoing business operations and strategic plan of San Miguel and the stability of its organization, “said Ramon S. Ang, president and chief operating officer of San Miguel.

Analysts said the move was meant to ensure additional protection for San Miguel, whose ownership structure is threatened by the emergence of a new blockholder in Top Frontier.

“Top Frontier’s mandate is to disperse San Miguel shares to the public to ensure an expanded shareholder base. San Miguel needs to acquire a stake in Top Frontier to ensure that current management will be protected,” said a source who requested not to be named.

While Top Frontier’s acquisition entitles it to five board seats in San Miguel, it was the group’s consensus to maintain the current composition of the diversifying conglomerate. Ongpin owns 30 percent of Q-Tech Alliance Holdings Inc., which purchased the 20 percent stake of Japan’s Kirin Holdings Co. Ltd. in San Miguel for P39.61 billion last May.

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

If they decide to move for a consolidation of their interests, the total shareholdings of both groups would reach 48 percent, 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.

Incorporated in March 2008, Top Frontier is owned 40 percent each by Zobel and Campos. The remaining 20-percent is held by Ongpin together with Master Year Ltd., a foreign-owned company.

Ongpin, Zobel and Campos are also behind Global 5000 Investments Inc., a key ally of San Miguel in power utility giant Manila Electric Co. (Meralco).

Top Frontier has offered to buy out other San Miguel shareholders at P75 per share. The tender offer is expected to take place in March this year.

San Miguel said Top Frontier has agreed to ensure the pursuit of the strategic direction of San Miguel to diversify into infrastructure, telecommunications, mining, energy and related industries.