San Miguel Trims Pure Foods Shortlist to Two

HONG KONG/MANILA (Reuters) – Universal Robina Corp (URC.PS) and a consortium comprising the Campos family and Century Pacific Group of Companies have been shortlisted by Philippine conglomerate San Miguel Corp (SMC.PS) to buy a stake in its Pure Foods (PF.PS) unit, sources told Reuters on Friday.

San Miguel Pure Foods Co Inc has a market value of about $1.3 billion, which would value the 49 percent stake at around $650 million, but valuation is difficult as it is an infrequently traded, illiquid stock with a free float of less than 0.1 percent.

In May, San Miguel President Ramon Ang said the food firm, which holds the group’s processed meats, poultry, livestock, feeds and dairy operations, had an equity value of around $1 billion, when its market value was around one-fifth of that.

San Miguel said on Friday it had cut the shortlist for a minority stake in Pure Foods to two bidders from five, without naming any of the parties. Ang said the remaining two bidders would conduct further due diligence prior to final negotiations.

The Campos family did not offer an immediate comment, while Century Pacific could not be reached for comment.

Global private equity fund Carlyle Group and CVC Capital Partners were among the parties sources said had expressed initial interest. One source told Reuters that Carlyle decided not to proceed, with out explaining the reason for pulling out.

Carlyle declined to comment.

DIVERSIFICATION

San Miguel launched the sale of a 49 percent stake in Pure Foods in 2009, but the process only picked up steam this year. JP Morgan (JPM.N) is advising San Miguel on the sale.

The 120-year-old conglomerate, which makes 9 out of every 10 beers sold in the Philippines, is diversifying away from its food and drink operations into power, mining, telecommunications and infrastructure.

Analysts expect San Miguel to use the funds for its push into heavy industry. Earlier this year, the firm obtained shareholder approval to sell more than 51 percent of its core businesses.

Pure Foods closed at 345 pesos on Wednesday and did not trade on Thursday or Friday.

San Miguel’s A shares, restricted to locals, rose 0.75 percent to 67.50 pesos, having equalled a six-month low of 67 pesos during trade. Its B shares (SMCB.PS), open to all investors, closed flat at 68 pesos.

Pure Foods bidder Universal Robina fell 1.5 percent to 32.5 pesos. The stock hit a lifetime high of 34 pesos on Wednesday.

By Denny Thomas and Rosemarie Francisco
 (Editing by Chris Lewis and John Mair)