SMC set to decide on option for Pure Foods

MANILA, Philippines - Diversifying conglomerate San Miguel Corp. will decide later this week whether to sell its 49-percent stake in San Miguel Pure Foods Co. Inc. or just pursue a secondary offering of shares to the public, according to a top company official.

“We will know by the end of the week, hopefully by Friday. Holding a secondary offering is still an option. Everything would depend on the bids to be submitted by the interested parties,” Ramon S. Ang, president and chief operating officer of San Miguel told reporters on the sidelines of Petron Corp.’s annual stockholders meeting yesterday.

Ang said San Miguel is expected to receive bids for the Pure Foods stake by July 15 but declined to name the identities of the bidders.

Among those that are reportedly bidding for Purefoods, which has an estimated enterprise value of $1.8 billion, include global private equity firms Carlyle Group and CVC Group, as well as Gokongwei-led food manufacturing unit Universal Robina 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.

CVC, 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.

Others that were earlier reported to have expressed interest to bid for Purefoods include the Campos Group, which owns leading pharmaceutical firm Unilab Industries Inc., and Century Canning Corp.

JP Morgan is San Miguel’s adviser for the sale, Ang said.

The 120-year-old conglomerate is trimming its stake in Purefoods 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 Purefoods.

Ang, however, earlier said the conglomerate was inclined to keep 51 percent of the food unit.

Purefoods is a good catch, accounting for 40 percent of the local poultry market and 63 percent of total hotdog sales. It is also into the canned and processed meats business in partnership with American meat company Hormel.

Purefoods is bullish on its prospects this year with net earnings seen to grow by 10 percent to 15 percent from P2.7 billion in 2009. In the first quarter this year, the company posted a net income of P872 million or six times the amount reported the same period in 2009 on revenues of P18.2 billion. Income from operations grew more than two-fold to P1.4 billion.