San Miguel Chairman Sells 14.7% Stake for $879 Million

San Miguel Corp. Chairman Eduardo Cojuangco sold a 14.7 percent stake in the Philippines’ largest company at a discount to President Ramon Ang and its majority shareholder, raising 37 billion pesos ($879 million).

Ang and majority shareholder Top Frontier Investment Holdings Inc. paid 75 pesos a share under an option agreement granted in 2009, according to San Miguel statements today. San Miguel fell 1 percent to 114 pesos in Manila trading today.

Ang, 58, bought an 11 percent stake, San Miguel said in a statement. Top Frontier’s purchase was equal to about 3.7 percent of the company, according to Bloomberg calculations using data in San Miguel’s statements.

The company that started as a brewer in 1890, eight years before the Philippines declared independence from Spain, has expanded into other industries such as energy, oil, mining and recently airlines under Ang’s leadership. The Philippine Supreme Court in April 2011 had ruled Cojuangco’s stake, whose ownership was contested by the government, was legally acquired.

Top Frontier was on Nov. 20, 2009 granted the option to buy the stake from Cojuangco. After Top Frontier partially exercised the option, the rest of the stake covered by it was offered to Ang, according to San Miguel’s statement today.

‘Friendly Terms’

“Given their long-standing relationship, there would probably be no changes in the way the company is being run,” said Astro del Castillo, managing director of Manila-based investment company First Grade Finance Inc. “Mr. Cojuangco may be exploring other business opportunities or may prefer to be more liquid.”

Top Frontier held a 61 percent stake in San Miguel as of today, according to data compiled by Bloomberg. A May 2011 filing said Top Frontier held about 67 percent of San Miguel’s common shares, while a group of 44 companies associated with Cojuangco own 21.2% as of the end of March 2011.

The sale to Ang was conducted “on friendly terms,” San Miguel said in an e-mailed statement. Ang bought 368.14 million shares while Top Frontier purchased 125.23 million shares, San Miguel said in a stock-exchange filing.

“There is no other person deserving of this opportunity to control a significant stake in the company that is close to my heart, than Ramon,” Cojuangco, 77, said in the statement. Cojuangco will remain chairman and chief executive officer even as he is “passing down control to a trusted friend,” San Miguel said.

Coconut Farmers

Shares in San Miguel held by Cojuangco and representatives of coconut farmers had been seized by the government in 1986 after a popular revolt ousted dictator Ferdinand Marcos. The Philippine government failed to prove that Cojuangco built his stake using government funds, the Supreme Court said in an April 2011 ruling.

San Miguel is the nation’s biggest electricity producer and controls Petron Corp. (PCOR), its largest oil company. Unit San Miguel Brewery, Inc., which is part-owned by Japan’s Kirin Holdings Co., controls more than 90 percent of the Philippines’ beer market.

In April, San Miguel acquired a 49 percent stake in Philippine Airlines Inc. and budget carrier affiliate Air Philippines Corp. Its other investments include stakes in power retailer Manila Electric Co and Indophil Resources NL, which has an indirect stake in the Tampakan gold and copper mine in southern Philippines.

To contact the reporter on this story: Cecilia Yap in Manila at cyap19@bloomberg.net

To contact the editors responsible for this story: Colin Keatinge at ckeatinge@bloomberg.net; Frank Longid at flongid@bloomberg.net

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