Kirin Said Interested in Buying Remaining San Miguel Stake

Kirin Holdings Co. is interested in buying the rest of San Miguel Brewery Inc. if approached, a person with knowledge of the matter said, after the Philippine beermaker revealed several bidders are vying for the shares.

Kirin, which holds about 48 percent of the brewer and is Japan’s biggest drinks maker, isn’t in talks with co-owner San Miguel Corp., said the person, who asked not to be identified because the deliberations are private. The Japanese company would consider a deal should San Miguel offer to sell its 51 percent stake to Kirin, the person said.

San Miguel Brewery, which sells nine of 10 beers in the Philippines, is attracting attention from suitors keen to boost their presence in fast-growing emerging markets. A valuation of about 20 times earnings before interest, taxes, depreciation and amortization is now “normal” for deals in the industry, San Miguel (SMC) President Ramon Ang said via text message today, implying a $5.9 billion price for the stake, according to data compiled by Bloomberg based on the brewer’s Ebitda last year.

Most of the world’s major brewers “would definitely be interested,” said Mikihiko Yamato, deputy head of research at JI Asia in Tokyo. “It’s possible that the price skyrockets. The brewery is almost a monopoly in the Philippines.”

Kirin shares fell 0.5 percent to 1,425 yen at the close of trading in Tokyo, reversing gains from earlier in the day when it had been up as much as 1.5 percent. Philippine markets were closed today for a public holiday.

‘Not Selling’

Ang said on Oct. 29 that “several parties” have approached the company about buying its majority stake in the Philippines’ biggest brewer.

“We’re not selling it,” Ang said earlier this week in Manila of the 51 percent holding in San Miguel Brewery. “But of course I’m not the only one who would decide.”

Heineken NV, SABMiller Plc, Anheuser-Busch InBev NV and Carlsberg A/S would all be interested, Trevor Stirling, an analyst at Sanford C. Bernstein in London, said on the phone. The Carlsberg Foundation, which controls the world’s fourth-biggest beermaker, said last month it will drop the requirement that it hold at least 25 percent of the share capital in Carlsberg, giving the Danish brewer room to pursue takeovers.

“It’s highly unlikely Kirin would let anyone else buy into the brewery,” Stirling said. Kirin failed in its efforts to acquire the food and drinks business of Singapore-based Fraser & Neave Ltd. earlier this year.

Sending a Message

Kan Yamamoto, a spokesman for Kirin, declined to comment. The media-relations departments of Anheuser-Busch InBev NV and SABMiller Plc couldn’t immediately be reached. Heineken didn’t immediately return calls seeking comment. Carlsberg spokesman Ben Morton declined to comment.

By saying there is multiple interest in San Miguel Brewery, Ang is sending a message to Kirin “that he wants Kirin to buy his stake at a higher price,” JI Asia’s Yamato said.

The median price-to-Ebitda ratio in brewery acquisitions above $1 billion announced in the past five years is 13, according to data compiled by Bloomberg. Heineken paid S$5.6 billion ($4.5 billion), or about 17.3 times Ebitda, last year to take control of Asia Pacific Breweries, the maker of Tiger beer, data compiled by Bloomberg show. San Miguel Brewery had 2012 earnings of 24.9 billion pesos ($575 million) on that basis.

“Kirin would definitely be interested” in the additional stake, Yamato said. “The near monopoly means that unlike in the Japan market, it wouldn’t have to spend much on advertising.”

Beer Decline

Kirin is expanding abroad amid Japan’s weakening demand for beer and similar drinks, which declined for an eighth straight year in 2012. It bought a 48 percent stake in San Miguel Brewery in 2009 for 131.6 billion yen ($1.3 billion).

San Miguel’s 10 brands include the namesake San Miguel Pale Pilsen. The Philippine brewery posted a record 14.4 billion-peso profit last year on 75.58 billion pesos of sales.

San Miguel is selling assets to bankroll a $35 billion investment plan to expand in airlines, energy and infrastructure. Ang said this week the company also received offers for its food and packaging units, declining to identify any suitors. Beverages accounted for 13 percent of the group’s revenue last year, while food made up 14 percent, data compiled by Bloomberg show.

San Miguel has said it is selling its 27 percent stake in Manila Electric Co., the nation’s largest power retailer, for 72 billion pesos to JG Summit Holdings Inc.

The company, which started when the Philippines was still a colony of Spain, has made more than $5.6 billion of acquisitions since 2008. Its most recent purchase was 35 percent of Northern Cement Corp. for 3 billion pesos.

To contact the reporters on this story: Yuki Yamaguchi in Tokyo at yyamaguchi10@bloomberg.net; Cecilia Yap in Manila at cyap19@bloomberg.net

To contact the editors responsible for this story: Philip Lagerkranser at lagerkranser@bloomberg.net; Stephanie Wong at swong139@bloomberg.net

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