San Miguel, Pure Foods in multibillion-peso share swap deal

San Miguel Corp. (SMC) on Monday bared plans to consolidate its food and beverage businesses under San Miguel Pure Foods Co., which will be renamed as San Miguel Food and Beverage Inc.

To execute the plan, SMC and San Miguel Pure Foods will exchange common and preferred shares.

In a regulatory filing, San Miguel Pure Foods said it is acquiring 7.859 billion common shares of San Miguel Brewery Inc. (SMB) and 216.972 million shares of Ginebra San Miguel Inc. from parent SMC for a total transaction value of P336.349 billion.

In return, SMC will subscribe to 4.242 billion additional common shares of Pure Foods—particularly from the new shares to be issued with an increase in authorized capital stock.

The valuation of the shares was based on an independent report by ING Bank N.V., with Standard Chartered as the transaction adviser.

The new shares of San Miguel Pure Foods will be listed on the Philippine Stock Exchange.

The execution of a deed of exchange between parent SMC and San Miguel Pure Foods, covering the shares of  SMB and Ginebra was approved by the board of directors during a special meeting on Friday, Ferdinand Constantino, SMC corporate information officer, told the Philippine Stock Exchange on Monday.

Pure Foods will expand its primary purpose to include alcoholic and non-alcoholic beverages in its product line.

The company's authorized capital will be increased to P12 billion, divided into 11.6 billion common shares, with a par value of P1 apiece.

It will also have 40 million preferred shares with a par value of P10.00 per share.

The transaction entails a change in corporate name to San Miguel Food and Beverage Inc. from San Miguel Pure Foods Company Inc.

Pure Foods is in the business of manufacturing and marketing coffee, animal feeds, meat products, ice cream and dairy products, and biscuit and flour-based snacks.

According to SMC, it is seeking a tax-free ruling from the Bureau of Internal Revenue (BIR) covering the share swap transaction.

It will also seek the approval of the Philippine Competition Commission (PCC), which is mandated to review all business transactions worth P1 billion and above.

Shares of San Miguel Pure Foods closed at P462.00 per share on Monday, up P154 or 50 percent from P308 on Friday.

San Miguel Corp. gained P5.50 or 5.43 percent to close at P106.80 per share, from P101.30 on Friday. — Jon Viktor Cabuenas/VDS, GMA News