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Last updated: July 20, 2010 3:36 am
Carlyle, the US private equity group, is vying with three Philippines business groups to buy half of San Miguel Pure Foods, the country’s largest food producer with a market capitalisation of 57.5bn pesos ($1.2bn).
San Miguel Corp, best known for its beer brand, has been selling holdings in its food and drink operations to fund diversification into new ventures including power, petrol, toll roads and mines.
The company is looking to sell a stake of at least 49 per cent in Pure Foods. Ramon Ang, president and chief operating officer, said Carlyle had submitted a bid alongside food producers controlled by the Gokongwei, Aboitiz and Campos family-run groups in the Philippines.
He said San Miguel would choose by Friday, but gave no details, although he said the company might agree to sell a larger stake.
Mr Ang said CVC, another private equity group expected to bid for Pure Foods, had not submitted an offer by last Friday’s deadline.
San Miguel holds a 99.9 per cent stake in separately listed San Miguel Pure Foods. JPMorgan is advising San Miguel on the deal.
Pure Foods owns some of the country’s best-selling food brands, which have bolstered profit margins in spite of increased competition from smaller rivals and imports from China and south-east Asia. Analysts said the main challenge facing Pure Foods was how to consolidate the fragmented industry.
Pure Foods contributes about 44 per cent of San Miguel’s revenues and is the Philippines’ leading producer of fresh and processed meats, poultry, flour and feed.
Pure Foods-Hormel, a joint venture with US food producer Hormel Food, generates twice as much annual revenue as its nearest competitor in processed meat.
San Miguel is in the middle of an ambitious strategic shift. It began in 2008 by buying half of Petron, the Philippines’ largest petrol refiner, and almost a third of Manila Electric, the country’s biggest electricity retailer.
This year it bought a power plant and invested in a toll road project.
The company last year sold 43 per cent of its beer business to Japan’s Kirin Holdings, whose total stake is now 48.3 per cent, for 58.9bn pesos.
San Miguel’s new business lines make up about two-thirds of the group’s total assets, compared with five years ago, when food, beverages and packaging accounted for two-thirds of its assets.
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