San Miguel to Sell Bank Stake as Ang Zooms In on FoodCecilia Yap
San Miguel Corp. will soon sell its stake in a bank as the Philippines’ largest company focuses on the core energy and food businesses, President Ramon Ang said.
San Miguel hired Citigroup Inc. to help sell its stake in Bank of Commerce that’s worth $500 million and has received interests locally and overseas, Ang told reporters in Manila today. “It’s not big enough for us to spend more time” on, he said, explaining the rationale behind the decision.
The country’s most acquisitive company since at least 2008 sold back its holdings in Philippine Airlines Inc. to billionaire Lucio Tan this month, and was paid $1.36 billion for the stake, working capital and advances, Ang said. The proceeds from the sale helped raise the funds San Miguel can readily deploy for acquisitions to about $4 billion, he said.
San Miguel has submitted an initial offer for British snacks maker United Biscuits Holdings Ltd., Ang said, declining to elaborate because of a confidentiality agreement. Companies including Burton’s Biscuit Co. and Kellogg Co. have made bids for the maker of snacks such as Jaffa Cakes and Twiglets, according to people familiar with the matter.
Shares of San Miguel fell 0.1 percent to 77.80 pesos at the close in Manila trading. The stock has advanced 24 percent this year after a 33 percent drop in 2013, the biggest annual decline based on records dating back to 1990.
“San Miguel is an opportunistic company,” James Lago, head of research at PCCI Securities Brokers Corp., said by phone. “It tweaks its portfolio and disposes investments that aren’t giving it the returns it wants and redeploys this capital to better opportunities.”
The company invested in the 51-year-old Bank of Commerce in 2008. The bank, which has 123 branches, posted net income of 688 million pesos ($15.5 million) last year as deposits rose 52 percent to 100 billion pesos, according to its website.
“We’re actively exploring opportunities in oil and gas. It’s definitely offshore; not in the Philippines, not China, not Vietnam,” Ang said. An energy-related target has the potential to boost sales by more than 50 percent, he said in July.
The company has announced about 40 acquisitions worth more than $7 billion since 2000, according to data compiled by Bloomberg. Last year, about 60 percent of sales came from fuel and oil, while food and beverage accounted for 25 percent. In 2010, food and drinks accounted for 69 percent of revenue, according to data compiled by Bloomberg.
“Energy is a sector with great margins and prospects given the imbalance between supply and demand,” PCCI Securities’ Lago said. “Food and beverage have stable margins and account for about half of the budget of consumers, who remain the major drivers of the economy.”
The company that’s produced the eponymous beer for more than a century will hold on to the brewery stake, Ang said. There’s no need to sell its 51 percent stake in San Miguel Brewery Inc., partly owned by Kirin Holdings Co., he said.
The company expects revenue from its food, drinks and packaging businesses to climb by at least 5 percent this year from about 2 percent growth in 2013, Ang said in June. Sales from energy and infrastructure, which accounted for about 72 percent, may increase by at least 20 percent this year, he said.
“We did not profit from that Philippine Air investment,” Ang said today. “We just recovered our capital.”