Palace to approve Kirin’s SMC buy-in

Malacañang is set to approve within the week the $540-million buy-in of Japanese firm Kirin Brewery Inc. into San Miguel Corp. (SMC).

Presidential Spokesman Rigoberto Tiglao said the transaction would be approved before the arrival in Manila of Japanese Prime Minister Junichiro Koizumi on Jan. 9.

Tiglao said final details of the purchase agreement would be divulged soon by the Presidential Commission on Good Government (PCGG).

He said the modified SMC-Kirin deal was tackled during a Cabinet-level meeting held Wednesday at Malacañang, attended by Executive Secretary Alberto Romulo, Chief Presidential Legal Counsel Avelino Cruz, Solicitor General Simeon Marcelo, Finance Secretary Jose Isidro Camacho, Trade and Industry Secretary Mar Roxas II and PCGG officials led by Chairwoman Haydee Yorac.

"Definitely, the decision has been made not to oppose it. But the nature of Kirin’s entry (into SMC) would have to be worked out. But definitely, the consensus of the Cabinet, and of course, the President... we cannot conceivably oppose such investment," Tiglao said.

The SMC board approved last month Kirin’s offer to buy 443 million of un-issued "B" shares of stock representing 15 percent of the country’s largest food and beverage conglomerate. At P62 per share, the stocks were worth P27.9 billion or $540 million.

Ranking Kirin executives, accompanied by SMC chairman Eduardo "Danding" Cojuangco, called on the President at Malacañang before Christmas to shed light on their transaction.

Government lawyers and the PCGG earlier warned that the deal might dilute the government’s shares in SMC under a purported voting trust agreement between Cojuangco and Kirin.

Tiglao said the SMC and Kirin officials gave assurances that there was no such voting trust deal.

"The agreement is Kirin would simply vote on certain basic corporate policies like expansion of plants, increase in capital. It’s not a voting trust," Tiglao said.

He added that the PCGG would still talk with Cojuangco on certain proposed revisions in the deal, specifically a tripartite arrangement involving Kirin, the Cojuangco group and the government through the PCGG.

"That’s an option we’re trying to explore. It would, however, be up to Kirin and Mr. Cojuangco," Tiglao said, adding that the issue would certainly result in a delay in the transaction as Kirin would have to go back to its principal and its lawyers.

Meanwhile, Mrs. Arroyo will announce soon her nominees to the board of directors of the Philippine Coconut Planters Bank representing the government shares.