San Miguel nears $1-billion deal for Pure Foods

MANILA, Philippines - Food, drinks and packaging giant San Miguel Corp. is close to finalizing a deal with the Campos family and tuna canner Century Pacific for the sale of San Miguel Pure Foods Co. Inc. for more than $1 billion, informed sources said yestersday.

Discussions between San Miguel and the Campos/Century group are at an advanced stage and a deal is likely to be concluded anytime soon, a source privy to the negotiations said.

San Miguel president and chief operating officer Ramon S. Ang said talks are still ongoing but did not elaborate. It also remains unknown whether Gokongwei-led Universal Robina Corp. (URC) withdrew its bid or failed to give an attractive offer for San Miguel’s stake in Pure Foods.

URC and the consortium of the Campos family and Century Pacific were earlier reported to be the two final bidders for Pure Foods, which San Miguel valued at $1.8 billion.

The acquisition of Pure Foods will give the buyers about 44 percent of the Philippine poultry market and 63 percent of the nation’s hotdog sales.

It is likewise not clear whether San Miguel would sell its entire 99.92 percent stake in Pure Foods or keep 51 percent of it. Ang was earlier quoted saying that the conglomerate was inclined to sell only 49 percent of Pure Foods but was open to selling more if “a spectacular offer” would be put forward on the table.

The Campos family owns pharmaceutical giant United Laboratories Inc. and NutriAsia Group, the market leader in the liquid condiments, specialty sauces and cooking oil market in the country. Its flagship brand, UFC, has an 85 percent market share in the local ketchup and hot chili sauce categories.

The NutriAsia Group also controls Del Monte Pacific, a leading food company that markets canned goods, fresh produce and packaged foods in China, India and the Philippines. It produces canned fruits and vegetables and processed foods such as condiments, pasta and sauces.

In the Philippines, where the group owns the Del Monte brand, it enjoys leading market shares for canned pineapple juice and juice drinks, canned pineapple and tropical mixed fruits, tomato sauce, spaghetti sauce and tomato ketchup, and also markets products under its second-tier brand, Today’s.

Meanwhile, Century Pacific produces and distributes canned tuna and sardines under the Century Tuna, Bluebay, 555 and Fresca brands. It also processes canned corned beef, meat loaf, beef loaf and luncheon meat under the brands Argentina and 555.

Century likewise distributes liquid milk and powdered milk under the brands Angel and Birch Tree.

The sale of a significant stake in Pure Foods, which holds the San Miguel Group’s processed meats, poultry, livestock, feeds and dairy operations, would help accelerate the conglomerate’s expansion into faster-growing industries including energy, telecommunications, mining and railways.

Ang said these new industries would provide a return on equity triple than its traditional food and drinks businesses.

Pure Foods is forecast to post a 10 to 15 percent growth in net profit this year on the back of a 10 percent jump in sales to P83 billion. In 2009, the company reported a record net income of P2.6 billion, a sharp increase from only P77.19 million the previous year.

In the first quarter this year, Pure Foods’ net earnings grew six-fold to P872 million from only P143 million.