2 global equity firms join bid for Pure Foods

MANILA, Philippines - Global private equity firms Carlyle Group and CVC Ltd. have reportedly moved to the forefront of a bidding war for San Miguel Pure Foods Co. Inc., the food manufacturing unit of diversifying conglomerate San Miguel Corp.

The Carlyle Group is a global alternative asset manager with more than $90.5 billion under management. With over 1,300 investors in 71 countries, the group focuses on management-led leveraged buyouts, strategic minority equity investments, equity private placements, consolidations and buildups, and growth capital financings.

It invests primarily in the following industries: Aerospace and defense, automotive, consumer and retail, energy and power, healthcare, real estate, technology and business services, telecommunications and media and transportation.

CVC Ltd., on the other hand, is one of the pioneering venture capital firms in Australia with investments in over 70 businesses across all industries. It has participated in over 20 initial public offerings and trade sales.

Local bidders reportedly include Universal Robina Corp. of the Gokongwei family, the Campos group which owns leading pharmaceutical firm Unilab Industries Inc., and Century Canning Corp.

The 120-year-old conglomerate is trimming its stake in Pure Foods to 51 percent as it diversifies away from food and drink operations into power, mining, telecommunications and infrastructure.

The sale process has been moving at a snail’s pace with the parent firm failing to get a good offer from the bidders. While the foreign bidders can easily fund the acquisition, they want 100 percent ownership of Pure Foods.

San Miguel president and COO Ramon S. Ang, however, earlier said that the conglomerate was inclined to keep 51 percent of the food unit. 

San Miguel is hoping to make a decision within the month regarding the sale of Pure Foods, which is estimated to have an enterprise value of around $1.8 billion.

With the buyers hard-pressed to meet the conglomerate’s selling price, San Miguel may just opt to sell its 49 percent stake in the food subsidiary through a secondary offering.

Pure Foods is a good catch, holding 40 percent of the local poultry market and 63 percent of the hotdog segment. It is also into the canned and processed meats business in partnership with American meat company Hormel.

Pure Foods has expressed optimism on its prospects this year with net earnings expected to grow by 10 to 15 percent. In the first quarter this year, the company posted a net income of P872 million or six times the amount reported for the same period in 2009 on revenues of P18.2 billion. Income from operations grew more than two-fold to P1.4 billion.