San Miguel sells food brands to Purefoods for P3.2 billion

MANILA, Philippines - Diversifying conglomerate San Miguel Corp. is selling its food-related brands and intellectual property rights to unit San Miguel Purefoods Co. Inc. for P3.2 billion in preparation for the sale of up to 40 percent of its interest in the food processing firm.

In a disclosure to the Philippine Stock Exchange, San Miguel said its board approved yesterday the sale of as much as 40 percent of its interest in SMPFC through a private placement to investors, which may include those outside the US or to not more than 19 non-qualified buyers domestically.

Aside from this, San Miguel’s board approved a plan that may allow it to subscribe to up to P5.2 billion worth of new SMPFC shares.

The board likewise approved the sale to San Miguel Purefoods International Ltd., its 51 percent interest in San Miguel Pure Foods Investment Ltd.  at book value.

San Miguel was earlier reported to be in talks with US food maker Hormel Foods Corp and other groups for the sale of nearly half of SMPFC.

Hormel owns 40 percent of processed meats firm The Pure Foods-Hormel Co, a subsidiary of Pure Foods.

San Miguel, Southeast Asia’s largest food and drinks group, said as early as 2008 it wants to sell parts of its major subsidiaries through strategic partnerships or a share offering and retain 51 percent as it ventures further into heavy industry.

The conglomerate is moving away from its core businesses and into capital-intensive and highly regulated sectors such as oil, power, water and telecommunications to feed future growth.

In April, San Miguel announced a P9.93-billion capital expenditure program for its food group with bulk of it, or P4.89 billion, going to the expansion of its hog farms and another P3.37 billion to beef up its poultry operations.

About P840 million has been set aside to raise the production of feeds from 39.7-million bags to 43.5-million bags.

SMPFC is building a P350-million ice cream plant in Sta. Rosa, Laguna as it aims to capture a larger if not dominant share of the market. The facility, which is currently under construction, will churn out five million gallons a year when completed in the middle of this year.

This would be the first ice cream plant to be constructed by the company. The group is currently outsourcing the production of its ice cream.