San Miguel Wants To Retain Control of Pure Foods

HONG KONG/MANILA (Reuters) – Philippine conglomerate San Miguel Corp (SMC.PS) effectively scrapped a planned minority stake sale in its unit San Miguel Pure Foods Co Inc (PF.PS) after talks with bidders hit a deadlock over the amount of shares being sold.

The sale of a 100 percent stake in Pure Foods, with a market value of about $1.3 billion, had the potential to be biggest foods and beverage sale in the Philippines.

The outcome of the year-long process is a setback for San Miguel, which is raising cash to push into high growth areas such as power, mining, oil refining, telecommunications and infrastructure.

“The final bidders had sought 100 percent ownership,” San Miguel President Ramon Ang said in a statement. “At this time, our board has decided that all that should be currently under offer by San Miguel is the sale of a minority stake in our Food Group,” he added.

Ang told Reuters last week that San Miguel would decide on the sale this week.

Talks with a consortium of the Campos family and Century Pacific Group of Companies were at an advance stage but the issue of control became a sticking point, leading to the deadlock, sources familiar with talks told Reuters.

The sale had attracted interest from global private equity funds including the Carlyle Group [CYL.UL].

The 120-year-old conglomerate, which makes nine out of every 10 beers sold in the Philippines, is aggressively diversifying away from its traditional food and drinks businesses. Some bankers had estimated the minority sale to fetch between $800 million and $1 billion.

“Selling a portion of its existing core businesses is one way San Miguel is raising funds to support its ongoing diversification into heavy industry,” the company said, without elaborating. JP Morgan Inc (JPM.N) is advising San Miguel.

In 2004, San Miguel acquired National Foods Ltd for $1.4 billion, the biggest food and beverage deal in Philippine.

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