The Philippines: San Miguel Food and Beverage completes P34 bln follow-on offering

Amid bearish market conditions, consumer powerhouse San Miguel Food and Beverage Inc. (SMFB) completed a follow-on offering worth P34 billion, widening its public float and allowing its parent conglomerate, San Miguel Corp., to raise fresh funds for expansion, Inquirer.net reported on November 10.

In a disclosure to the Philippine Stock Exchange on November 9, SMFB said 400.94 million of its shares had been sold at P85 a share.

This represents less than half of the maximum offering of 1.02 billion secondary common shares, including oversubscription option, that SMFB was authorized to sell to the public.

“[With] challenging market conditions, the follow-on [offering] was already a success and this will bring their free float near 12 percent,” BDO Capital & Investment Corp. president Eduardo Francisco said in a text message.

BDO Capital is among the lead local underwriters for the offering, along with BPI Capital Corp.

JP Morgan Securities Plc, Morgan Stanley Asia (Singapore) Plc and UBS AG Singapore are the joint global coordinators while Deutsche Bank AG Hong Kong and Goldman Sachs (Singapore Plc) are the joint bookrunners. Standard Chartered Bank is the financial advisor.

With the completion of this follow-on offering, SMFB’s shares gained by 2.97 percent at the stock market to close at P84.95 per share on Friday, giving it a market capitalization of P487.5 billion. This company is now more valuable than its parent conglomerate, SMC.

Shares of SMC likewise rose by 0.88 percent to close at P17.50, giving it a market capitalization of P404.35 billion.

Meanwhile, SMFB has granted UBS authority to conduct stabilization activities in connection with the offer. As stabilizing agent, UBS was given an option to purchase in whole or in part as much as 133.05 million additional common shares at the offer price from listing date up to 30 days thereafter.

The common shares recently sold to the public will be listed on the bourse on November 12.

SMFB was recently transformed into new consumer powerhouse with the infusion of P336.35 billion worth of shares in beer and liquor businesses held by its parent conglomerate. This means that in addition to the food businesses under San Miguel PureFoods, SMFB now owns majority of San Miguel Brewery, the country’s leading beer-maker and Ginebra San Miguel, the country’s leading gin-maker.

Based on the prospectus, 87 percent of SMFB’s revenue is from categories where it is the market leader. The flagship beer brand has an estimated market share of 92.7 percent.

Following the SMFB consolidation, the company expects to benefit from the synergies and cost savings generated through its expanded size, shared infrastructure and group-wide procurement.

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