SMC divests 15% stake in Purefoods

MANILA, Philippines - Diversified conglomerate San Miguel Corp. is selling to institutional investors a 15-percent stake in San Miguel Pure Foods Co. Inc. (SMPF) for P6 billion to help its food manufacturing unit meet the required 10-percent minimum public float rule.

In a disclosure to the Philippine Stock Exchange, SMPF said its parent firm is offering 25 million shares of the food firm at P240 each, the bottom of the indicative price range.

The offer price is a steep 64.7-percent discount to SMPF’s last traded price of P680 on Nov. 15.

The shares include 2.5 million common shares solely to cover over-allotments.

The transaction will be crossed at the PSE today.

The sale is aimed at boosting SMPF’s public float to as much as 17.5 percent from the current 0.08 percent and meeting a yearend deadline by the local bourse to comply with the 10-percent minimum public ownership rule.

San Miguel said it will use proceeds from the offering for general corporate purposes.

SMPF has earmarked a total of P6 billion in capital expenditures for 2012 and 2013, majority of which will go to the ongoing construction of the Mabini grains terminal in Batangas, slated for operations in the third quarter next year. The terminal is designed to accommodate larger vessels which would reduce freight costs.

The company also intends to expand existing production facilities for value-added meats and dairy, spreads and oils businesses as well undertake major repairs of existing facilities.

Funding for the expansion will come from internally generated cash and third-party debt and/or equity financing.

SMPF owns popular brand names Magnolia, (a leading player in chicken, butter and milk products), Monterey (fresh and marinated meats), Purefoods (refrigerated processed meats and canned meats), B-Meg (animal feeds) and Dari Crème and Star (margarine).

It holds leadership in multiple segments – non-refrigerated and refrigerated margarine (97 percent), nuggets (79 percent), hotdogs (64 percent), fresh meats (42 percent), commercial feeds (41 percent) and butter (38 percent).

Overseas, the company has presence in Vietnam and Indonesia through two subsidiaries. San Miguel Pure Foods (VN) Co. Ltd. is a profitable hog farming and feed milling business and seller of Le Gourmet processed meat products, while PT San Miguel Pure Foods Indonesia is a leading producer and marketer of halal fresh processed meat products for retail, food service and institutional customers in Indonesia.

SMPF is one of three units of San Miguel with public ownership of less than 10 percent. The two others include San Miguel Brewery Inc. and San Miguel Properties with public floats of 0.61 percent and 0.06 percent, respectively.