San Miguel plans to buy out common shareholders
abs-cbnNEWS.com | 05/25/2009 4:34 AM
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The board of diversified conglomerate San Miguel Corporation has announced a plan that could potentially lead to the few large shareholders taking the company private.
On Friday, San Miguel told the stock exchange that it is offering its shareholders the option to exchange some 1.1 billion common shares—which represent 35 percent of the voting stock—into non-voting preferred shares.
Analysts say this move is, in effect, an offer to buy out the shareholders who are uneasy with the change of San Miguels’ business strategy to power, mining, and other supposedly high-growth industry, from it previous stable but low-growth food and beverage core business.
The swap offer was back-to-back with San Miguel’s disclosure to the stock exchange that it has completed the sale of its 43.3 percent stake in San Miguel Brewery (SMB) to Kirin Holdings of Japan for P39.6 billion. Kirin, on the other hand, has also sold its 19.9 percent stake in San Miguel Corporation, the parent of SMB, to Q-Tech Alliance, which is composed of top San Miguel executives’ partners in Petron and in Q-Tel, San Miguel’s telecommunications venture.
In a statement, San Miguel president and chief operating officer Ramon Ang said, “We are doing this to address concerns from some shareholders about San Miguel’s diversification thrust.”
Its financial advisors Citibank and ATR Kim Eng Capital Partners explained, "The exchange offer is a proactive approach by SMC to engage with existing shareholders who may seek to assume a different risk profile in the light of the current global financial crisis and the investments of the company in Manila Electric Co. and Petron Corp.,"
San Miguel has acquired an indirect majority of Petron, the country’s biggest fuel retailer, and is in the running to control—or assert control in—Meralco, the country’s biggest power distributor.
San Miguel’s offer involves swapping common shares, which closed at around P51 last week, into preferred shares at a premium ranging from 30 to 50 percent. While non-voting, the preferred shares will be entitled to dividend yields about thrice that of common shares—giving shareholders who will opt to exercise the option an instant valuation gain.
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