Big fight looms over RP food giant

Big fight looms over RP food giant

MANILA (Reuters): A bid by a Hong Kong firm to take over San Miguel Corp could turn into one of the biggest fights in the Philippine corporate world and may revive a stock market battered by a regional currency crisis, analysts said yesterday.

And looming over the scene is the shadow of a top crony of late dictator Ferdinand Marcos and his tussle with the Philippine government over ownership.

First Pacific Co Ltd, whose parent is the powerful Indonesian Salim Group, stirred Manila's stock market when it announced last weekend it had acquired a stake of about two percent in the food and beverage giant.

It said its affiliates were engaged in talks regarding a substantial investment in the firm.

"The deal is not yet done but based on good sources, it is 70 percent complete," an industry source told Reuters. "Thirty percent can still scuttle the deal."

Analysts said First Pacific's bid would pump fresh liquidity into a stock market badly hammered by the financial turmoil that has brought several Southeast Asian economies to their knees.

More than a century old, San Miguel is one of the gems of the Philippine corporate world, started by the Sorianos, a wealthy Filipino family of Spanish descent.

Andres Soriano III is the current chairman of the company, although his family controls less than two percent.

"There could be a bidding war between the two groups (First Pacific and the Sorianos) as they try to outbid one another," food analyst Oliver Calma of Sun Hung Kai Securities said.

One industry source said he believed there was "50-50 chance" that the family of Soriano would try to outbid First Pacific.

"If he (Soriano) really wants it, there are people, foreign and otherwise, willing to finance (him). If he wants it, there's going to be big struggle," the source added.

Initially a small brewery firm, it has sprouted into a conglomerate that produces beer and about 30 other products from ice cream and dressed chicken to animal feed and shrimps.

Its assets totaled $2.27 billion in 1996 when it posted profits of $231.5 million. The Philippines' only multinational company, it has offices in China, Hong Kong, Indonesia, Vietnam and Mongolia.

San Miguel said on Monday a special meeting of its board of directors examined the implications of "possible changes of control and recent developments in the market for SMC shares" in the wake of First Pacific's move.

At the center of the brewing battle for company control is the 20 percent stake owned by industrialist Eduardo Cojuangco, one of the closest business associates of late president Marcos, industry sources said.

Cojuangco's stake is part of the 47 percent of shares of San Miguel which the government has sequestered, contending they were bought with money allegedly amassed illegally by Marcos and his "cronies".

Another 13 percent is held by two state pension funds, one of which released a statement on Wednesday saying it had no plans to sell.

President Fidel Ramos said yesterday he had authorized the head of the agency controlling the 47 percent sequestered shareholding to negotiate with interested parties.

The shares are controlled by the Presidential Commission on Good Government (PCGG).