SMC sells Aussie businesses

PHILIPPINE NEWS SERVICE — San Miguel Corp., Southeast Asia’s largest food and beverage conglomerate, said Thursday it will use proceeds from the sale of its stake in boutique Australian brewing group J. Boag & Son to fund plans to diversify into new businesses.

San Miguel said it sold its premium Tasmanian brewer J. Boag & Son to Australian brewing and wine group Lion Nathan Ltd. for A$325 million.

San Miguel’s sale of Boag’s coincides with the company’s divestment of Australian dairy and juice manufacturer National Foods Ltd. In Tokyo, Kirin Holdings disclosed it will acquire 100 percent of National Foods from San Miguel for 294 billion yen.

Kirin owns 20 percent of San Miguel.

“While Boag’s is an excellent business with strong brands, San Miguel is in a process of redefining itself and injecting into our operations a higher return on investment-focused discipline,” Ramon Ang, president and CEO of San Miguel, said in a statement.

“We are reassessing our priorities and reshaping our portfolio to include new businesses that we feel will give us higher margin growth in the near- and medium-term, ” Ang said.

“This is an acquisition offering strong strategic value. Boag’s is a company with great brands and a reputation for brewing excellence, and its market focus is highly complementary to Lion Nathan,” Rob Murray, Lion Nathan CEO, said in the same statement.

Ang said proceeds from this and other previously announced divestments could be used for a number of alternatives such as San Miguel’s entry into new businesses.

San Miguel has announced plans to invest about $750 million, equivalent to a tenth of its total assets, in new businesses such as power generation and transmission, mining and infrastructure.

The company, founded as a brewery in 1890, has dominated the Philippine market for beer, dairy, processed food, grains and poultry. Struggling to boost growth in a maturing domestic market, it decided to expand its businesses through acquisitions in Asia, including National Foods.

After setting its sights on becoming a key regional food and beverage manufacturer, San Miguel has changed course and is now once again redirecting its focus on the domestic market.

“It’s a good move. Venturing into businesses with bright prospects like mining and power is a pro-active strategy to maintain its profitability, ” said Jose Vistan Jr., research director at AB Capital Securities.

San Miguel may also be able to cut costs following the sale of its Australian businesses, the acquisition of which was funded by loans, said Francisco Liboro,
president of PCCI Securities.

“Those acquisitions where touted as strategic acquisitions, but then the cost of funding the acquisitions was probably just a little too much for San Miguel,” Liboro said.

Last Tuesday, San Miguel said it was expecting to raise around P25 billion from the planned initial public offering of its domestic beer unit next year.

It will also undertake a separate IPO for its regional packaging business.

Following the disclosures in Sydney and Tokyo, San Miguel voluntarily requested the Philippine Stock Exchange to suspend trading in its shares.

San Miguel’s A shares, limited to Filipinos, was last traded at P55.00, while its B shares were steady at P58.00.